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22 July 2015
A working paper released by the IMF this morning suggests that the efficiency of central Government may have a greater impact on national productivity than previously thought. It examines the impact of public sector efficiency on productivity across Italy and finds that
The overall effect is great enough that, were all regions to have a public sector as efficient as the most efficient region, Italy’s national productivity would rise by nine per cent. The UK has a far more efficient public sector than Italy, so it is possible that the impact would be smaller. How much smaller it would be is impossible to say without replicating the research locally.
The Coalition Government pushed hard for increased efficiency in Whitehall and it appears that the present administration will continue that drive. This research shows that improvements must be as focussed on improving the outputs as they are on cutting costs. Improvements in central Government provision of goods and services could have benefits far beyond Westminster.
James Zuccollo, Senior Economist, Reform