Baig, T., Mati, A., Coady, D., and J. Ntamatungiro, 2007, “Domestic Petroleum Product Prices and Subsidies: Recent Developments and Reform Strategies”. IMF Working Paper 07/71 (Washington: International Monetary Fund).
Charnes, A., Cooper, W., and E. Rhodes, 1978, “Measuring Efficiency of Decision-Making Units,” European Journal of Operational Research, Vol. 3, pp. 429– 44.
Farrell, M., 1957, “The Measurement of Productive Efficiency,” Journal of the Royal Statistical Society, Series A, Vol. 120 (3), pp. 253– 90.
Mattina, T., 2007, “Efficiency and Flexibility of Public Spending”. Czech Republic—Selected Issues in Fiscal Policy Reform (Washington: International Monetary Fund).
Mattina, T. and V. Gunnarsson, 2007, “Budget Rigidity and Expenditure Efficiency in Slovenia,” IMF Working Paper No. 07/131 (Washington: International Monetary Fund).
Simar, L., and P. Wilson, 2007, “Estimation and Inference in Two-stage, Semiparametric Models of Production Processes,” Journal of Econometrics, 136 (2007), pp. 31– 64.
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World Bank, 2005b, “Egypt—Public Expenditure Review: Policy Note 2: Making Egyptian Education Spending More Effective,” available at http://www.mof.gov.eg/english
World Bank, 2005c, “Egypt—Toward a More Effective Social Policy: Subsidies and Social Safety Net” (Washington: World Bank), available at http://www.mof.gov.eg/english
Prepared by Todd Mattina and Aliona Cebotari (FAD).
The fiscal year begins July 1. For example, FY 2002 refers to the fiscal year July 2001 to June 2002.
Social protection spending includes subsidies, grants, and social benefits.
Even the available data, however, suffers from many weaknesses, including the potential lack of comparability across countries in terms of concepts, coverage, and timing.
Countries tend to consume larger and more varied packages of public services as they grow wealthier (e.g., the Wagner effect).
In this note, comparator countries refer to emerging markets with a GDP per capita of up to US$12,000 in PPP-adjusted terms (Egypt’s GDP per capita in PPP terms is US$4,800).
Public healthcare spending in Egypt accounts for close to 40 percent of total healthcare spending. This is broadly consistent with the share of public healthcare spending in similar income countries (48 percent) in the region, including Jordan, Iran, Syria, and Tunisia. In contrast, the public share of healthcare spending in Turkey and Algeria is about 70 and 80 percent, respectively.
The data on government spending discussed in this section adjusts for the estimated cost of fuel subsidies prior to FY2006, when these were not recorded on budget. For example, expenditures for FY2003 were increased by 3.9 percent of GDP to reflect estimated fuel subsidies not captured in the fiscal data.
Looking ahead, the authorities envisage greater use of public-private partnerships (PPPs) to meet Egypt’s sizable social and infrastructure needs. PPPs are also envisaged for water treatment centers in Cairo, major hospital facilities, and infrastructure to support the Nile river transportation corridor.
The framework applied in this chapter was originally developed in Verhoeven, Carcillo, and Gunnarsson (2007).
See Martina and Gunnarsson (2007), and Martina (2007) for a similar discussion.
The DEA approach readily accommodates multiple-output and multiple-input “production technologies” for transforming inputs into outputs. The former is used in this chapter, given the trade-offs involved in allocating public spending among various desired outcomes.
By construction, the set of feasible input-output combinations is convex.
The input- and output-based efficiency scores equally assume constant returns to scale. However, the DEA models considered in this chapter permit variable returns to scale. See Zhu (2003) for a technical elaboration of the DEA approach.
Ideally, these factors should be controlled in a second stage, using bootstrapping techniques as discussed by Simar and Wilson (2007). DEA results can be biased due to a small sample, as discussed by Simar and Wilson (2000). Initial bias-corrected results using a bootstrapping technique did not affect the rankings presented in this study. However, this chapter presents unadjusted efficiency scores owing to convergence problems in some of the results.
For a clear example, a country with a mountainous terrain would have a much higher cost of producing an equivalent road network than a country with a flat terrain, but the DEA analysis would label the former as “inefficient.” More generally, the DEA analysis can be extended to evaluate the importance of exogenous factors affecting cross-country differences in efficiency. This is usually done through Tobit regressions, by using DEA efficiency scores as the dependent variable and various exogenous factors as explanatory variables, or through truncated regressions as suggested by Simar and Wilson (2007).
The International Association for the Evaluation of Educational Achievement (IEA) administers a cross-country standardized test in mathematics and science called the Trends in International Mathematics and Science Study (TIMSS). In 2003, the test was taken by eighth-grade students in 46 countries.
Real spending is measured in PPP terms to account for the higher relative price of non-tradable inputs in richer countries (e.g., the Balassa-Samuelson effect).
For a complete overview of the healthcare system, see World Bank (2005a).
References to percentiles should be interpreted as share of countries that do worse than Egypt.
The World Bank’s (2005a) recent note on the health sector in the context of the Public Expenditure Review indicates that the rural infant mortality rate is 50 percent higher than the urban rate.
See World Bank (2005a).
See World Bank (2005b)
World Bank (2005b)
World Bank (2005b).)
This section draws heavily on World Bank (2005c).)
The World Bank (2005c) report found that the cost of delivering one dollar of resources to the poor costs almost US$500 through gasoline subsidies, US$30 for natural gas subsidies, US$46 for high-quality bread subsidies, and about US$5.50 in other in-kind food subsidies.)
Between 2000 and 2005, the poverty rate has increased from 16.7 percent to 19.6 percent; see World Bank (2007).)
The share of populations living on less than US$2 per day in Morocco, Tunisia, and Turkey is well under half the Egyptian rate.)
Based on the percentage of children under the age of five who are underweight for their age group.)
The World Bank estimates that cash transfers represent less than 5 percent of spending on the social safety net. In-kind subsidies largely account for the remainder of the social safety net.1)
Three quarters of the poor in Egypt live in rural areas, and more than half live in rural Upper Egypt.)