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In recent years, a growing body of academic studies have attempted to empirically assess the efficiency and usefulness of public sector activities in industrial countries. That is, these studies analyze the impact of government spending on the welfare of citizens by examining a host of economic and social indicators. Most studies have concluded that government spending could be more efficient and less than it is today.

Comprehensive measures of government performance and efficiency are, however, still quite limited. The objective of the underlying study, which this paper summarizes, is to provide proxies for measuring public sector performance and efficiency. Two indicators, the Public Sector Performance (PSP) index and the Public Sector Efficiency (PSE) index, are calculated for 23 industrialized countries, including Canada. A subsequent analysis measures the wastefulness of public expenditures by determining the lowest level of government spending (as a percent of GDP) necessary to attain a given level of public sector performance.