ABSTRACT
This chapter investigates the political determinants of public sector efficiency using cross-national data of 117 countries from 2001 to 2010 and a two-stage DEA-Tobit method. The first-stage DEA method finds two types of efficiency frontiers: developing-country frontiers and developed-country frontiers. It is also found that governments in developed countries, on average, have a higher public sector efficiency than those in developing countries. Tobit’s estimation in the second stage considers that it is not the level of democracy but the durability of political regimes contributing to public sector efficiency. Further study finds that institutional quality regarding property rights protection and freedom from corruption plays a fundamental role in determining public sector efficiency by shaping a long-lasting political regime.
