Public Sector Size and Quality

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Periklis

Dr. Periklis Gogas is an Associate Professor of Economics, International Economics Department, Democritus University of Thrace, Greece

Matthaiou

 

Ms. Maria Matthaiou is a PhD Candidate in Economics, Democritus University of Thrace, Greece

 

It has been widely thought that the main cause of Greek crisis is the size of the Greek public sector, i.e. both the percentage of government spending in the total GDP and the number of public servants of the Greek government. Nonetheless, the international experience shows that a large public sector (as a percentage of the country’s GDP) is not necessarily restrictive to growth and prosperity. In the following graph, we can see the size of the government in various European countries and their relative effectiveness. We can easily observe that Greece with a 48% share of government spending in total GDP is below the average. Nonetheless, Greek government spending effectiveness in the quality produced is trailing the other countries by far. France, Austria and the Scandinavian countries that are members of the EU sustain a far larger government sector but the quality of the services produced is significantly larger than Greece’s. Moreover, these countries exhibit a higher per capita income and standard of living as compared to Greece.

The most important problem of the Greek public sector and at the same time the most difficult to overcome, is that it is ineffective. The Greek government must focus on improving the quality of the public sector. This is associated with reforms in the cost structure and an improvement on the functionality of the relative legislation. A reduction of the size of the public sector may be easier, but may not be as effective in terms of social prosperity.

The only way to improve the effectiveness and productivity of the government sector is through training and retraining of the public servants to the current needs and the introduction of new technologies in all aspects of public administration. This can and will improve the productivity and the quality of services of the Greek state to its citizens and of course the business world that is need for a sustainable growth.

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