Unraveling the links between public spending and Sustainable Development Goals: Insights from data envelopment analysis

Abstract

The global agenda is undoubtedly determined by the success of achieving the Sustainable Development Goals (SDGs). Both public and private institutions show great efforts towards the full integration of the SDGs in their own agendas. Ultimately, national governments are responsible for the effective budget allocation for sustainable development. The lack of open, discussed and widely accepted general guidelines related to how to link national public spending (based on the classification of the functions of government) to the achievement of the SDGs is reported in the literature. Thus, the aim of this paper is to propose an initial mapping between them, as well as to assess, through data envelopment analysis (DEA), the national public spending efficiency where government expenditure is consumed (inputs) to attain a certain progress in indicators specific to all 17 SDGs (outputs). On the one hand, results were analyzed for each SDG by income groups, unraveling inefficient spending strategies, thus identifying potential weaknesses that should be overcome before some countries can achieve the same level of progress on SDGs as the best performing nations. On the other hand, it was demonstrated that low income and high income countries deliver higher average public spending efficiency. Countries of these two groups are more often deemed efficient, being displayed alongside the efficient frontiers of the DEA. This finding highlights that low middle-income and upper middle-income countries exhibit the major room for improvement in public spending.