Measuring the efficiency of governments is not that simple because the traditional input and output indicators used to measure performance are not clearly defined.


Among the government performance indicators used are the following:

●Contribution of government to GDP and living standards.
● Contribution of government to international competitiveness, using an international competitiveness ranking or index and its components, as produced, for example by the World Economic Forum.
● Internal measurement of performance activities including the quality of regulations, the quality of public services and quality of policy formation, independence and general standards of governance.


Whatever indicators are selected it’s important to have in place an effective and independent monitoring and evaluation system (M&E). Mackay (Independent Evaluation Group (World Bank) (2007) argues that high M&E standards are required as part of an overall governance framework. Evidenced based policy making comes from high M&E standards and underpins sound policy making effective and efficient budget decisions and management and accountability. There is, however, no perfect M&E model for governments. The Council of EU Economic and Finance Ministers and the OECD’s ‘Going for Growth’ project are searching for it and for good reason. General Government final consumption expenditure often accounts for 20% or more of GDP and in many cases accounts for a greater share of GDP than industry sectors including agriculture, resources and manufacturing. Growth in productivity of government is therefore important as a source of productivity growth generally. But the effectiveness and efficiency of government is not defined simply by expenditure and its share of GDP. Equally important is the impact of government on living standards, quality of life and international competitiveness. These results are often governed by the quality of regulations and the depth of understanding of the fundamental causes of market failure and the most efficient way to intervene.


What can we do to enhance government effectiveness and efficiency?

● Capacity building to enhance awareness and understanding of government performance measurement and M&E.
● Monitoring and evaluation and diagnosis for performance improvement.
● Benchmark performance against other relevant and comparable countries or governments at a regional level.
Our approach to government efficiency

Diagnostics and M&E work has to be owned and supported by leaders at very senior level of government. Without this support the information generated contributes little to improved government performance and governance. The private sector advocacy sector also has a natural interest in achieving improved government efficiency.

Government efficiency example

●Evaluated performance of a major government backed R&D corporation.
● Contributed to improved capacity of government ministry and their motivation and incentive to enhance private sector growth through improved international competitiveness.
●Assessed broadband uptake and efficiency use of local governments in Australia.

Interesting links for improved government efficiency: