The efficiency of government spending on health: Evidence from Europe and Central Asia

Abstract

This paper uses data envelopment analysis (DEA) to evaluate health expenditures to demonstrate how productivity has changed over time for 46 selected countries in Europe and Central Asia. Our results show that countries could have increased output by 1.2% given the existing level of inputs. The patterns of efficiency change for the observed countries are further analyzed using the Malmquist productivity index (MPI). Decreased productivity growth is related to technical change. Finally, we regress efficiency scores on a set of environmental variables using a Tobit model. The positive influence of hospital beds and primary schooling on efficiency scores demonstrates that countries with better medical environments and a greater number of educational years may enjoy increased efficiency. In addition, there exists a regional effect between Europe and Central Asia.