The efficiency of government spending on health: Evidence from Europe and Central Asia

• This paper provides implications for countries in the Europe and Central Asia to improve their efficiencies.
• The average level of overall technical efficiency is 98.8%.
• Productivity growth decreased on average by 7.7% per year.
• In Tobit model, the positive influence of the hospital beds and average years of primary schooling on efficiency scores.
• There is a regional effect between the Europe and Central Asia.

This paper uses data envelopment analysis (DEA) to evaluate health expenditures to demonstrate how productivity has changed over time for 46 selected countries in Europe and Central Asia. Our results show that countries could have increased output by 1.2% given the existing level of inputs. The patterns of efficiency change for the observed countries are further analyzed using the Malmquist productivity index (MPI). Decreased productivity growth is related to technical change. Finally, we regress efficiency scores on a set of environmental variables using a Tobit model. The positive influence of hospital beds and primary schooling on efficiency scores demonstrates that countries with better medical environments and a greater number of educational years may enjoy increased efficiency. In addition, there exists a regional effect between Europe and Central Asia.