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TERRA ECONOMICUS

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  • Efficiency in public sector: Illusion of comprehension and its consequences

Efficiency in public sector: Illusion of comprehension and its consequences


TERRA ECONOMICUS, , Vol. 19 (no. 1),

The article suggests the evolutionary origin of the efficiency concept as an integral part of the human behavior economic rationality. Rationality requires an analysis and comparison of the resource use options in terms of results. Those options are chosen that promise to lead to the best results for the individual. If there are several options for action leading to the best result (the same goal), they are compared in terms of efficiency. For implementation, one is selected that allows to achieve the previously selected goal with the least costs. It is shown that economic rationality is not reduced to resources saving, since the most useful (best) results usually imply a greater resources expenditure. Thus, the efficiency concept is applicable only to the comparison of options that allow to achieve the same goal in different ways. If the goals achieved by the options differ from each other, it makes no sense to compare such options in terms of efficiency. The developed evolutionary understanding of efficiency is applied to the analysis of the practices of its evaluation in the public sector. It is shown that in countries belonging to different legal families, different understandings prevail of what the efficiency of public sector organizations means. In Russia, efficiency is often equated with effectiveness, while in common law countries the economic understanding of efficiency prevails. As a result, during the public sector reform in the Russian Federation, a number of principles which go back to Western reforms based on the New Public Management are implemented. The efficiency evaluation relies on the systems of indicators that make it practically impossible to evaluate the efficiency.
Citation: Tambovtsev, V.L., Rozhdestvenskaya, I.A. (2021). Efficiency in public sector: Illusion of comprehension and its consequences. Terra Economicus, 19(1), 17–35. (In Russian.) DOI: 10.18522/2073-6606-2021-19-1-17-35


Keywords: evolutionary approach; efficiency; public sector; evaluation; indicator; public administration

JEL codes: D73, H61, O21, P11

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ISSN: 2073-6606