Efficient Expenditure Allocation for Sustainable Public Services?-Comparative Cases of Korea and OECD Countries

Abstract

There have been contrasting trends in government expenditures spending among OECD countries. This study analyzed and compared the efficiency of government expenditures of OECD countries and Korea, focused on the health and welfare and social overhead capital (SOC) sectors, using data envelop analysis (DEA) and Tobit methods. Based on the indicator values of national ranking, Korea ranked 19th in the health and welfare sector and 10th in the SOC sector. However, compared to other countries in the OECD, Korea's government expenditure has shown the highest efficiency in health and welfare (rank 1 with efficiency score of 2.401), while transportation SOC was at a level below the average (rank 13 with efficiency score of 0.813). In order to maintain a high level of efficiency in health and welfare expenditures, it is important for the Korean government to understand and improve conditions of the rates of poverty, unemployment, life expectancy, and low fertility. Moreover, in order to overcome the low level of efficiency in the SOC sector, the government needs to improve the quality of transport infrastructures along with implementation of an effective infrastructure-linking system between various modes of transportation, thereby enhancing its transport network density.