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ASIM ERDİLEK a.erdilek@todayszaman.com Columnists

Sizing up governments


Trying to mitigate the harmful effects of the global financial crisis, governments in most countries have intervened in their economies in various ways.

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In some countries, especially the US, the governments through extraordinary and controversial interventions have partially nationalized several financial and industrial companies to prevent their collapse, aiming to reduce the systemic risk to the entire economy. Thus, the role of governments in the economy and society has increased substantially, raising questions about the efficiency and effectiveness of that role. Deepening concerns about these questions have unleashed heated debates among politicians, academics and business leaders in the media.

One of these questions of critical importance is the rising public debt burden resulting from ballooning budget deficits. Deficit spending to fight the global crisis is believed by many to have reached unsustainable levels requiring urgent rationalization.

Others, on the other hand, argue that premature withdrawal of government support for the fragile economy could be too risky before a solid recovery is achieved. Moreover, the demands for government transparency and accountability are increasing, a reflection of the perceptions of public and private failures behind the global crisis and the concerns about the scale and scope of government interventions during the crisis.

In releasing its first “Government at a Glance” report last Thursday, the Organization for Economic Cooperation and Development (OECD) has begun to make an important and timely contribution to this debate. This 157-page report is an addition to the OECD's “At a Glance” series of regular reports on such crucial topics as education, health, pension and society.

The objective of this new biennial publication is twofold: (1) to shine a light into the black box of how governments work in OECD countries on the basis of internationally comparable data -- used to develop 31 quantitative and qualitative indicators -- about government institutions, structures, inputs and public administration practices; and (2) to examine the issues in public governance (the exercise of political, economic and administrative authority) confronting governments due to the long-term effects of the global crisis. The report compares the 30 OECD countries, including Turkey, in the size and scope of government at the central and local levels, in terms of revenues, expenditures and employment. It also contains indicators summarizing government policies and practices with respect to integrity, e-government and open government as well as composite indexes summarizing practices in budgeting, procurement and human resource and regulatory management. These composite indicators are critical for the success of the current efforts in strengthening fiscal discipline and reforming market mechanisms.

The report's special feature, Chapter I “Current and Future Public Governance Challenges,” discusses critical public governance issues such as integrity in the public sector and fiscal sustainability facing governments in terms of the long-run effects of the global crisis, linking them to the indicators contained in Chapters II-X. Furthermore, it focuses on the need for governments to change their public governance systems in order to respond more flexibly and effectively to unpredictable circumstances. The indicators, which measure the various aspects of government's management capacity, in Chapters II-X show the current size and scope of government. Chapter II “Government Revenues” covers the level and structure of government revenues. Chapter III “Government Expenditures” examines the structure of government spending. Chapter IV “Intersection between the Public and Private Sectors” focuses on how goods and services are produced, i.e., whether the government produces them itself or it contracts them out. Chapter V “Public Employment” examines the level and characteristics of the public sector workforce. Chapter VI “Human Resource Management Practices” and Chapter VII “Budget Practices and Procedures” review government production processes in the ways human resources are used and the ways revenues are collected and expenditures are allocated. Chapter VIII “Regulatory Management” covers government regulatory design and reform practices. Chapter IX “Integrity” reviews how governments try to prevent corruption and promote integrity. Chapter X “Open and Responsive Government” examines the extent to which governments have made themselves accountable to the general public and developed e-government services.

The indicators developed as multiple bar charts in these nine chapters are aimed at enabling OECD members as well as non-members to: (1) better understand and situate their own practices; (2) benchmark their achievements through international comparisons; and (3) learn from the experience of other countries facing similar challenges. According to the figures below, the “Government at a Glance” framework defines the public production process in terms of six major indicator categories: context, revenue, inputs, processes, outputs and outcomes. The inaugural edition of the report includes only four of these categories: context, revenue, inputs and processes. I cannot summarize here all the interesting results about Turkey, but let me underline one striking result. Although in the OECD area the Turkish government is among the smallest governments in terms of its share in gross domestic product (GDP) and total employment, it is among the most centralized governments in terms of the distribution of revenues and expenditures as well as government employees.

Since the most current data used in the report are for 2007, predating the global crisis, the report cannot track the quantitative effects of the extraordinary government interventions during the crisis on the various indicators. Although government spending as a share of GDP, varying between 30 percent and 53 percent of GDP within the OECD area in 2007, had been shrinking in most OECD countries, with the advent of the global crisis it has risen sharply. In Turkey government spending is expected to rise to 38.2 percent of GDP in 2009 from 33.8 percent in 2007; the budget deficit is expected to rise to 6.6 percent of GDP in 2009 from 1.6 percent in 2007; and the public debt is anticipated to rise to 47.3 percent of GDP from 39.4 percent.

The OECD has begun to render another commendable service in adding “Government at a Glance” to its “At a Glance” series of publications. This report, as it is further enhanced in future editions, should enable public officials as well as private citizens in OECD member and non-member countries to benchmark the performance of their governments against those of other governments and also help the diffusion of best practices of public governance.

26 October 2009, Monday
ASIM ERDİLEK
   
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