Government spending in italy – inefficiency vs

Government spending in italy - inefficiency vs

Government spending in Italy – inefficiency vs. corruption

What determines how efficiently a particular public service is provided? The authors of CEPR DP6799 use a dataset of procurement prices paid by Italian public bodies to disentangle the result of active waste (overpricing that benefits the decision-maker directly, like bribing) and passive waste (overpricing because of sheer inefficiency). The results indicate that passive waste makes up about 83% of the full total estimated waste.

What determines how efficiently a particular public service is provided? The authors of CEPR DP6799 use a dataset of procurement prices paid by Italian public bodies to disentangle the result of active waste (overpricing that benefits the decision-maker directly, like bribing) and passive waste (overpricing because of sheer inefficiency). The results indicate that passive waste makes up about 83% of the full total estimated waste.

The authors analyse prices of 21 types of standardised goods (e.g. paper, printers, etc…) paid by over 200 Italian public bodies in the time 2000-2005. Using subperiods, the general public bodies could only procure the products independently; in others the products were also available through a national procurement agency, Consip, which charged the same price to all or any public bodies.

Some public bodies may actually pay systematically a lot more than others for the same kind of goods. Observed differences aren’t linked to geographical location but instead to the sort of body, with the central administration paying normally 22% than health authorities and universities (municipality is among). The differences look like because of passive waste instead of active waste. The results claim that sheer inefficiency can be an important element of government waste. There exists a risk that policy measures targeted at reducing corruption, like additional administrative hurdles or external controls, may increase passive waste.

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