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Economics
Efficient governments, defined as those that provide digital public services and effectively support their citizens through modern tools and channels, can be the result of a variety of factors, including education, urbanization, infrastructure, and economic growth as measured by GDP per capita.
- e-government
- government efficiency
- education
- internet use
1. Introduction
Efficient digital public services, or e-government, can increase the transparency of administration, increase savings for businesses and governments alike, and facilitate more active participation in democratic practices [1]. While there are many studies aimed at deconstructing the relationship between a government and its citizens, it is still unclear which factors lead to the adoption of e-government services or the relationship between costs and benefits. From declining cash use and documenting economic transactions and interactions, to better collection of taxes and saving costs, and opportunity costs in terms of compliance, the e-government paradigm can accelerate economic growth [2].
A significant increase in the use of information technologies in government functions and procedures has become a relevant factor in society and economic activities but it is, of course, subject to the availability of the relevant infrastructure [3].
The COVID-19 pandemic has accelerated governments’ digital transformation, but different countries find themselves at very different stages in their digital journeys. In general, European countries have been early adopters of e-government, prompting the EU to commit to provide all key public services online by 2030 [4]. However, significant differences remain, in part due to disparities in funding and digital infrastructure, as well as political will more broadly. Some countries offer comprehensive e-government portals that cover healthcare access, taxation, or digital ID, while others only offer basic services such as online forms [5]. The European Commission [4] scores Estonia and Malta as the most mature, but some Eastern European countries score nearly half on the same scale. Estonia is often considered a world leader in e-government, not just because of its innovative solutions such as digital ID, but also because of its comprehensive online services for citizens and businesses alike [6].
2. Determinants of E-Government Use in the European Union
The relationship between a government and its citizens has already been empirically examined in many studies, but evidence is mixed, and it remains unclear how an efficient government can contribute to economic growth. Empirical analysis varies in terms of scope, considering the regional contexts, the models used and the examined periods, but government efficiency is generally found to positively impact the economy and the functioning of society, with beneficial implications for countries’ economic growth and competitiveness. The most important and relevant findings of previous studies are discussed, which are also summarized in Table 1.
Table 1. Summary of extant literature on government actions and government efficiency.
| Authors | Period and Region/Countries/Entities Studied | Empirical Model | Main Input Variable(s) | Output(s) |
|---|---|---|---|---|
| Hauner and Kyobe [9] | 1980–2004; 114 countries | Panel model | Education and health spending Years of schooling Income per capita |
Government efficiency |
| Voghouei and Jamali [10] | 2003–2010; 51 countries | Dynamic panel model—system-GMM | Information technology expenditure by government Total information technology expenditure in economy Consumer price index Transparency Corruption Ethnic fractionalization |
Government efficiency (government spending as share of GDP) |
| Lizińska et al. [11] | 2015–2016 1220 municipalities in Poland |
Survey | Number of tasks actually implemented by local governments Number of tasks which could be implemented |
Institutional efficiency of local governments |
| Balaguer-Coll et al. [12] | 2009–2015; The Valencian Region | Robust order methodology | Population density Unemployed job seekers Disposable income Accommodation vacancies Political ideology of the incumbent party Herfindahl index Voter turnout in local elections Tax revenues Transfer revenues Indebtedness Number of mistakes in the budgetary statements |
Index of (in)efficiency |
| Halaskova et al. [13] | 2012–2015 and 2015–2018; 27 EU countries | Data envelopment analysis (DEA) | Local government expenditure by function | Government effectiveness Corruption perceptions Index |
| Wen et al. [14] | 1996–2018; 166 countries | Panel data | Government efficiency Bureaucracy quality |
Patents and trademarks |
| Ding et al. [15] | 2002–2018; 156 countries | Panel data | Government efficiency | Health outcomes (disability-adjusted life years (DALYs)) |
| Reinecke and Schmerer [16] | 2001–2006; Chinese firms | Panel data regression | Government efficiency Firm age Sales State-owned enterprises Employment and capital stock Total factor productivity (TFP) |
Export share on total output |
| Chen and Yoon [17] | 2010–2016; A-share listed firms from 27 Chinese provincial government | 2SLS regression | Administrative efficiency of local governments | R&D expenditure over total assets Number of patent applications |
| Amir and Gokmenoglu [18] | 2002–2015; 31 OECD countries | Panel data model | Government efficiency Corruption Employment Population Urbanization |
Financial development |
| Gupta and Verhoeven [19] | 1984–1995; 37 countries in Africa | Free disposal hull (FDH) analysis | Education and health spending by the government | Life expectancy Infant mortality Immunizations against diseases School enrolment Adult illiteracy |
| Geys [20] | 2000; Flemish region in Belgium | Stochastic parametric reference technology | Current expenditures in the municipality | Number of subsistence grants beneficiaries Number of students in local primary schools Public recreational facilities Length of municipal roads. |
| Liu et al. [21] | 2007; 22 Local governments in Taiwan |
Data envelopment analysis (DEA) model; Sharpe ratio. | Employment Accumulation of fixed assets |
Real disposable income per capita Unemployment rate Volume of waste clearance Air pollution |
| Asatryan and De Witte [22] | 2003–2011; German State of Bavaria | Fully non-parametric approach | Per capita expenditure | Pupil population Child population Elderly patient population Green and recreational areasEmployees paying social security |
| Chang et al. [23] | 1990–2014; 31 OECD countries | Group-mean dynamic common correlated estimator (DCCE) panel regression Panel cointegration Vector-error-correction model (VECM) |
Corruption, political ideology Real per capita GDP FDI Oil prices Electricity regulation Gas regulation |
Energy intensity |
| Seo et al. [24] | 2015–2016; 42 central administrative agencies in the Republic of Korea | Data envelopment analysis (DEA) | IT budget Number of employees |
Number of policies for the adoption of Government 3.0 Number of open public data (API) Number of public services that can be applied for online |
| Alonso and Andrews [25] |
2002–2008; local governments in the United Kingdom | Dynamic panel data model | Total per capita service expenditure, excluding expenditure on central administration. | Fiscal decentralization Fiscal deprivation Number of pupils attending the General Certificate of Secondary Education examination Older people being helped to live at home Waste management |
| Chen and Paudel [26] |
2004–2017; 30 provinces in China | Malmquist–Luenberger index Dynamic panel model |
Number of people employed by government Provincial-owned economic capital stock Annual financial expenditure. |
GDP per capita Unemployment rate Consumer price index Ratio of middle school teachers to students Density of transportation infrastructure Number of hospital beds per capita Number of cases of corruption per 10,000 people Rate of labor dispute settlement |
| Pacheco et al. [27] | 2008–2018; 324 Chilean municipalities | Parametric models and panel data | Expenditure on personnel Consumer goods and services Expenditure on education Expenditure on health Transfers to health services and centres Transfers to public education schools Municipality population Distance to the regional capital |
Rural and urban municipal education establishments; Enrolment in municipal education establishments Health facilities Maintained green areas; Cleaning services, waste collection and landfill services Drinking water coverage Social organizations |
Extant literature on the effects of government efficiency is abundant. For example, Balaguer-Coll et al. [28] showed that government efficiency in neighboring Spanish municipalities positively affects local government’s own efficiency. Other OECD-focused studies strongly indicate that government efficiency, measured by employment, urbanization, and government spending, has a positive effect on financial development [18]. Greater government efficiency is also found to lead to a reduction in energy intensity by enhancing overall energy efficiency [23]. Clear links have also been established between government efficiency and democracy—for example, intense democratic activity which promotes competition is associated with higher efficiency in the provision of goods and services [22] while corruption is found to decrease government efficiency [18].
More recently, the literature has also turned to exploring the effects of e-government. For example, some studies have found that e-government efficiency positively affects the output and innovation investment by reducing rent-seeking opportunities, reducing bureaucracy, and improving the overall technological abilities of government staff [14,17]. Seo et al. [24] examined e-government efficiency in Korea and found citizen-centric IT service integration and IT investment to be key driving factors. Furthermore, Voghouei and Jamali [10] argue that government efficiency responds in a positive way to changes in information technology expenditure, whether in the government or in broader society. Moreover, in certain countries, government inefficiency sharpens the domestic technology gaps by providing inappropriate advantages to firms that are already well ingrained and leads to slower technology penetration rates [29].
More broadly, government expenditure is also widely used in conjunction with government efficiency. Individuals assess the ‘price/quantity’ of government policies by considering the level of spending on (or taxation for) public goods provision simultaneously with how much public goods they receive [20]. Hauner and Kyobe [9] underline that higher government expenditure relative to GDP tends to be associated with lower efficiency. On the other hand, improvements in educational attainment and health output are feasible by correcting inefficiencies in government spending on education and health [19]. Ding et al. [15] have also shown that increases in government efficiency can significantly improve health outcomes.
Government efficiency is not the only aspect that could be enhanced by e-government; education is another important factor [30]. Indeed, Horobet et al. [31] find that in the EU, education plays a key role both in digitalization and financial development, with no significant differences between Western and Eastern European economies. Cerna et al. [32] show that education has quickly adapted to the accelerated digitalization instilled by the COVID-19 pandemic, making it even more relevant when discussing its impact on digitalization.
Digitalization, measured by either internet use or number of mobile subscriptions, is key when discussing e-government [1]. DESA [33] finds that most UN countries have a national digital government strategy in place, and that in nearly all countries, people’s as well as authorities’ digital engagement has increased. In the long run, digitalization could lead to a paradigm shift towards a digital-first society, with new forms of digital money, enabling novel and more efficient ways of interacting with services [34,35]. However, the road ahead remains long. Spacek et al. [36] have shown that the level of digitalization in Central and Eastern European countries remains modest.
Dobrolyubova et al. [37] found no direct cause and effect relationship between the digitalization of government and other governance indicators such as effectiveness. Further, Ahmad et al. [38] show that many public services remain manual because their digital equivalent is inadequate, featuring blank web pages, invalid forms, or out of date information. This suggests that e-government involves more than just the tools that allow citizens to interact with their governments in digital form; it also involves rethinking processes so that they can become digital-first and making interaction with government easier, cheaper, and quicker [1]. Indeed, Mensah et al. [39] and Chen et al. [40] conclude that the use of e-government services is not predicted by the performance, effort, or social influence but instead by the perceived service quality and trust in government.
Several studies that associate local authorities’ efficiency with state government efficiency as a whole, because of its positive influence on the competitiveness of a country. In this regard, Liu et al. [21] find that the operating performance of local governments has a strong influence on a country’s competitiveness. Additionally, the paper of Reinecke and Schmerer [16] highlights a positive correlation between firm size and export shares, as stimulated by high governmental efficiency. In fact, it stands out that larger firms in provinces with more efficient provincial governments have higher export rates. When it comes to the population, Chen et al. [26] demonstrated that an improvement in government efficiency in the urban area can increase the urban population. When considering other perspectives, EU countries’ efficiency appears to be more strongly linked to their effectiveness than the overall perception of corruption [13].
Some studies have revealed that many local governments do not fully apply the available tools to streamline the provision of administrative services [11]. When it comes to fiscal decentralization, it is positively related to productive efficiency, but there is a negative relationship between socioeconomic deprivation and efficiency [25].
This entry is adapted from the peer-reviewed paper 10.3390/soc13060150
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