Public Sector Efficiency and Effectiveness – An Application to the New EU Member States and Croatia

The main purpose of the paper is to review and to discuss different conceptual and methodological issues related to the performance measurement in public sector. In particular, Free Disposal Hull (FDH) and Data Envelopment Analysis (DEA) techniques are presented and then applied to selected New EU Member States and Croatia. The paper employs indicators relating to efficiency/effectiveness in a selected policy areas such as education and health care. The results show that efficiency and effectiveness differs significantly across the selected countries. However, in general, a relatively average performance in most of the new EU countries and Croatia is accomplished with too many inputs so that efficiency is quite low. In other words, the selected countries could use less resource to attain the same outcomes if they were fully efficient. In addition, the paper points out some deficiencies relating to the employed techniques and definitions. Indeed, the applications of presented techniques are hampered by lack of suitable data to apply those techniques and the precise definition of inputs, outputs and outcomes which may significantly influence the empirical results