Growth of the public sector during the course of the XX century has led to the fact that most of the developed countries spend between one third and one half of its gross domestic product on services provided by the state. Recently, many European countries have been influenced by the fiscal crisis manifested through low rates of economic growth and high accumulated public debt that piled up due to significant budget deficits. Services provided by the public sector are often not adequate and do not satisfy needs of citizens, and on the other hand pecuniary resources available for those service are meeting hard constraints. Therefore, it is important to raise the question of public sector efficiency, so that better results could be achieved with reduced spending of public resources.
Countries with an inefficient public sector can increase their efficiency through various reforms (introducing competition to provision of services, providing concessions for infrastructure development or partial privatization and reducing state interference, better social spending targeting, etc.) which would lead to the decrease of spending requirements and increase of the quality of goods and services that public authorities deliver to citizens.
This is especially important for Republic of Serbia, as research of public sector efficiency in post-transitional countries shows that public sector in Serbia is the least efficient of all countries included. Study shows that it is possible to deliver current level of services with a significantly lower public spending if efficiency would be improved (it would reach 35.9% instead of 46.3% GDP). Compared to previous year 2014, Serbia has not improved its results and is still at the bottom of the public sector efficiency index.
Public Sector Efficiency Index in Post-Transitional European Countries for 2015 can be downloaded here.