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Good governance helps fiscal policy spur economic growth

03 Jul '07
2 min read

“The biggest challenge in most countries in ECA is to increase the efficiency of public spending,” emphasizes World Bank Sector Director and co-editor Cheryl Gray. “This is particularly important to enhance growth prospects and ensure that populations benefit from expenditures in health, education, pensions, and infrastructure.”

The study offers policy recommendations to enhance the efficiency and effectiveness of public spending in these four sectors, drawing on experience in high-growth countries such as Chile, Korea, and Ireland. In education and health, for example, Eastern Europe achieves good results but at a high cost.

Reorienting spending away from expensive vocational programs and high-cost hospital care, moving to per capita financing, and realigning cost-sharing between governments and students or patients can both help make public spending more effective and yield better results.

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