RATIONALIZING PUBLIC SPENDING ACCORDING TO THE REQUIREMENTS OF HUMAN SECURITY OBJECTIVES: A COMPARATIVE STUDY USING DATA ENVELOPMENT ANALYSIS
DOI:
https://doi.org/10.15407/economyukr.2025.02.086Keywords:
rationalization of public spending; dimensions of human security; data envelopment analysis; efficiency; variable returns to scaleAbstract
Public expenditures are a fundamental tool for governments to shape their economies. Traditionally, they were primarily used to intervene in markets and address public needs. However, in recent years, they have evolved to become essential for achieving broader goals, particularly those related to human security. This security encompasses social, health, environmental, and economic well-being, and is crucial for fostering sustainable development.
To assess the efficiency of public expenditures in promoting human security, we conducted a study using data envelopment analysis (DEA). DEA is a mathematical technique that compares the relative efficiency of different decision-making units (DMUs) by measuring their output-to-input ratios. We analyzed 44 countries with varying geographic locations and income levels, examining their input efficiency under different assumptions about returns to scale.
Our findings revealed that 36% of the countries in our sample were operating at full efficiency, and the average efficiency was impressively high at 78%. Countries like India and Vietnam served as models for over 17 other countries. Furthermore, we identified specific actions that could be taken to improve efficiency. For example, Greece, Poland, and Hungary could potentially reduce public spending by 49%, 12%, and 51% respectively without compromising human security. Additionally, our findings highlight the need to reevaluate our understanding of human security. We must shift away from the notion that it primarily involves consumer spending and toward a perspective that emphasizes investment in societal well-being. Such investments create the necessary conditions for individuals to engage in economic activities effectively.
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