The Financial Responsibility of Government, Expenditure Efficiency and State Competitiveness

Abstract

Any national government is responsible for creating the largest possible added value for the society, as this is the way to increase the wealth of the nation, and secure improving living standards for the population. Efficient and effective government budgeting and expenditure management is the way to value creation. Efficiency means offering the highest quality service at the lowest possible cost to society. Effectiveness is explained by how the national objectives and priorities are established, and policy programs are elaborated. This article explores relationships between Hungarian public spending as inputs and thei effects on the economy and society as outcome in international comparison. The structure of public spending is analysed in the context of how the different elements affect economic and social indicators keeping in mind the importance of accountability, transparency and human rights. The article concludes that although it is not easy methodologically to find a correlation between public expenditure management and its effects on the economy and society, still statistical data analysis can highlight weaknesses in how efficiently resource allocation is managed in the budgetary process. It can also direct attention to necessary further explorations into the fields of governance structure and institutional capacities which also affect efficiency of expenditure management.