It has long been recognised that the efficient function of the public sector is a prerequisite for a country's competent economic performance. This paper aims to identify a robust methodology for the measurement of the relative public sector efficiency (government efficiency) of 19 OECD countries over the period 1980-2000.

Data for five disaggregate accounts of public spending were employed and relative efficiency scores estimated for each of them as well as for aggregate public spending. The results suggest that the quality of governance is more important than the socioeconomic environment or luck.

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