The efficiency of public spending on tertiary education in Malta : a comparison to European countries using a DEA approach

Abstract

This study assesses the efficiency of public expenditure on tertiary education in Malta in relation to other European countires. As governments continue to face tightened financial pressures, efficiency in public spending is becoming even more important. This is of particular importance for the education sector as education is fundamental for development. Taking a Data Envelopment Analysis (DEA) approach, efficiency scores for the European countries were calculated for the period 2001-10. The countries were then ranked according to average efficiency scores for two periods namely 2001-05 and 2006-10. Based on two models, results indicate that when taking physical inputs, Malta operated relatively efficient. However, according to the second model, when taking expenditure as an input, Malta operated relatively inefficient, although still achieved acceptable scores. This implies that other countries produced the same or more output with less input, being expenditure. However, one also points out that as public expenditure on education in Malta followed an upward trend in recent years, mainly reflecting an increase in expenditure of a capital nature as well as the introduction of new courses and an increase in students, one expects that the output (measured in terms of increase in graduates) will be noted only with a time-lag. Having said this, from this analysis, it is indicative to policy makers that there is still room for improvement in outcomes of the tertiary education sector.