Performance Measurement and Resource Allocation

A number of studies have documented that public and private sector organisations do not use their limited resources efficiently. A possible implication is that reallocation of resources from the provision of goods and services that have relatively low marginal social benefits to those that have relatively high marginal social benefits would enhance overall social welfare. Another implication is that resources have not been used by the most productive means; ie, it is possible to produce more goods and services without additional resources. Suggested remedies range from industry reforms such as restructuring and deregulation to promote competition, to institutional changes such as adoption of efficient management practices.