Efficiency Of Government Expenditure In The Ecowas Sub-Region

ABSTRACT Efficiency of government expenditure is very important in the management of every economy since outcomes depend on the ability of resources to reach their target destination. Governments all over the world spend a high percentage of their GDP annually and countries in the ECOWAS sub-region are no exception. With efficiency, countries can achieve better outcomes with the same level of spending or even less. This study, therefore, seeks to examine the relationship between government spending on education and health and outcomes in the ECOWAS sub-region; estimate the efficiency of government spending in education and health; compare the efficiency of government spending among countries in the sub region and finally examine the governance and institutional factors that determine the variation in this efficiency among countries. Panel data for the 15 countries from 2002 to 2011 was employed. We explored the fixed and random effect models in panel regression to address the first objective. We estimated efficiency and explored its determinants using the Stochastic Frontier Analysis (SFA). Results show a negative relationship between public spending and primary enrolment and it is not statistically significant. The relationship between public spending and life expectancy is positive but weak. Results show that public health spending has a negative and significant impact on infant mortality rate. The effect of public expenditure on primary enrolment is positive but not significant. Per capita income, however has a significant impact on enrolments. Control of corruption, political stability and technological changes were identified as the main determinants of efficiency. Results also indicate that countries in the ECOWAS sub region are operating at efficiency levels of 59% for the health sector and 52% for the education sector. Based on the finding, the study recommended among other things that government should do everything possible to eliminate iii corruption, make jobs available to the citizens and ensure that wastage in spending is minimized as much as possible.