Why is the issue of effective spending of public funds relevant? Government activities should have a significant impact on certain key economic and social indicators. The result of effective public sector work is the correct spending and efficient allocation of resources. Government spending in developing countries usually accounts for a significant share of GDP. Consequently, even small changes in the efficiency of public spending can have a large impact on GDP and on the achievement of government goals.
What inferences have international studies reached and what conclusion can be drawn from it?

I.    In countries with higher spending levels, performance indicators are lower.

The Fraser Institute researchers came to an interesting conclusion that countries with small governments (where public spending is less than 40% of GDP) are about 40% more effective in achieving public sector performance levels. The efficiency of the public sector in these countries exceeds the efficiency by 10.3% compared to countries with medium-sized governments (where public spending is between 40 and 50% of GDP) and compared to countries with large governments (where public spending exceeds 50 percent of GDP) by 5.6 %.

II.    Various factors affect the fact that some countries may need less resource to achieve similar results.

Although it is not possible to deduce a universal causal relationship, it is possible to understand why some countries may need less resource than others to achieve similar results. Both cost inefficiency and results inefficiency were studied in a sample of 140 countries using data from 1996 to 2002. The empirical study came to the following conclusions: (1) the efficiency of spending public funds is lower in countries where the wage Fund accounts for a large share of the state budget; (2) countries with a higher ratio of public funding for services to private funding show lower efficiency, as do countries with higher income inequality; (3) countries with higher aid dependency ratios also tend to have lower efficiency, probably due to the instability of this type of funding, which hinders medium-term planning and budgeting.

The results of these studies prove that it is important not only to increase the amount of funding in sectors that are important for the country, but also to prioritize the issue of spending efficiency.

Why is this issue important, in particular, for Kazakhstan?

Kazakhstan is on the 65th place (out of 136 countries) in the rating of efficiency of public spending, which was made by experts of the World Economic Forum based on the results of surveys of business community leaders (The Executive Opinion Survey). It is worth noting that Kazakhstan was assigned a rating of 3.3 (on a scale of 1 = not at all effective, 7 = very effective). At the same time, there is a trend to reduce efficiency. The results of this study make it clear that Kazakhstan has problems in this issue and, accordingly, the potential for growth.

Sources:
1. Public Sector Performance: An International Comparison. 2007. THE FRASER INSTITUTE.
2. Efficiency Of Public Spending In Developing Countries: An Approach To The Efficiency Boundary Vol. 1, 2 & 3. 2005. World bank
3. A survey of public opinion leaders (GCI). 2017-2018. the world economic forum.