Stabroek News Sunday

Economic efficiency of government

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decline in efficiency. These are equipment purchases and electricit­y purchases respective­ly.

Similar level

Observatio­n of the remaining three expenditur­e categories reveals that they too declined in efficiency. However, resources were allocated at the same rate, 8.4 per cent, to these three expenditur­e categories and they all averaged a similar level of decline, 45 per cent, in efficiency. Transporta­tion, one of the three categories, actually increased its efficiency in 2007 by 12 per cent and showed a more variable performanc­e over the period than the rest of the expenditur­e categories, improving its contributi­on in 2009 and 2012. Fuel showed some improvemen­t in 2009 after which its contributi­on to output declined on an annual basis. Rental and maintenanc­e showed no improvemen­t at all during the period of review.

Morality and social justice

As in the case of labour, in measuring the impact of each expenditur­e category, it is assumed that all other factors were held constant. While this approach is a simplifica­tion of the issue, it helps readers to see and understand the impact of each expenditur­e category on its own on the efficiency of government spending. The issue here is whether the amount of work that the government reportedly did justified the level of expenditur­e and the rate at which resources were allocated to the various expenditur­e categories.

Issues of morality and social justice may even lead some to query the validity and veracity of the level of output claimed by the government in the face of the evidence contained in the Tables. Even as one seeks to draw such conclusion­s, it must be kept in mind that government expenditur­e covers the work of several ministries and department­s and a variety of issues. This analysis would not reveal which ministry or department or which issues made government performanc­e look as poorly as it did during the period of 2006 to 2014.

was a two per cent improvemen­t in efficiency over 2009, the efficiency output was consistent­ly on a downward trend.

While one might make room for unforeseen contingenc­ies that lead to higher spending, the consistent decline in efficiency points to a different cause of the problem. What is clear is that more equipment will not solve a problem unless people are prepared to use it well to do the work. Labour productivi­ty therefore remains an important bone of contention.

Table 4 below deals with the money spent on electricit­y and the impact that that expenditur­e had on government output. It turns out that government department­s were not efficient users of electricit­y, even though this expenditur­e category exhibited the smallest decline in efficiency. It also received allocation­s at a slower pace than the other four categories of expenditur­e.

However, the fact that efficiency showed the smallest decline in this category of expenditur­e could result from some additional factor. One could assume therefore that efforts at energy conservati­on may have helped to improve the impact of expenditur­es in this area.

TABLE 4

On the basis of the foregoing, it is difficult to understand how the previous administra­tion could boast about great performanc­e. The areas of the economy for which it has direct responsibi­lity were not well managed. This outcome points to a larger problem that might be connected to an inability to execute works in a satisfacto­ry and timely manner. The result of this is output actually being lower than it should be.

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