The Size of the Public Economy and Its Economic Efficiency Problem

Abstract

The public economy, which has reached a significant size in terms of both quality and quantity, collects and spends resources between 30% and 70% of GDP on average, shapes up the economy, and acts as a complementary element next to the private sector. Therefore in this study, the relationship between the size of the public sector (its spending) and its efficiency was analyzed. For this purpose, a 24-year data of the period, 1995 to 2018, were evaluated. In this context, a comparison was made between the data of 36 OECD-member countries and seven non-OECD countries. In conclusion, it was seen that, since OECD-member countries are generally high-income countries, public expenditures in those countries are far from populism and are used effectively in order to meet the social needs. On the other hand, in developing countries, since the growth in the public expenditures tends towards mostly public goods and services in which political actors are given priority, the efficiency either remains limited or is negative.