Democracy and Public Sector Efficiency : An Empirical Study with the Cross-National Data

This paper investigates the political determinants of public sector efficiency using a cross-national data from 117 countries in the period of 2001 to 2010, with a two-stage DEA-Tobit method. The first-stage DEA method finds two types of efficiency frontiers, developing-country frontiers and developed-country frontiers, and governments in developed countries on average have better efficiency than those in developing countries. Tobit estimation in the second stage finds that not the level of democracy but the durability of political regimes contribute robustly to public sector efficiency. Further study finds that institution quality regarding property rights protection and freedom from corruption plays a fundamental role in determining public sector efficiency by shaping long-lasting political regimes