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EVALUATING EFFICIENCY IN THE PUBLIC SECTOR: AN EXAMPLE OF ESTONIAN MINISTRIES
Abstract
The aim of the present article is to assess the management efficiency of five Estonian ministries before and after moving to a common building using Data Envelopment Analysis (DEA). The DEA method compares the output-to-input ratios of several decision-making units and determines whether one unit is more efficient or less efficient than other units. Additionally, Parsonss AGIL paradigm about the continuity of social systems was used in our study. The AGIL paradigm states that for continuity or sustainability, there must be a balance between the performances of four dimensions: A adaptations, G goals, I- integration, and L latency or values. In this case study, inputs and outputs for DEA are based on the financial reports of the Ministry of Finance, the Ministry of Social Affairs, the Ministry of Justice, the Ministry of Education and Research, and the Ministry of Economic Affairs and Communications of the Republic of Estonia in the timeframe between October 2016 to March 2018. First, the authors calculated for each ministry the economic costs per person and labour costs per person which were used as outputs for DEA. For determining the inputs, the authors interpreted several cost accounts as the phenomena of different capital forms. Next these capital forms were grouped into four groups of AGIL and in each group, the sum per person was calculated. This being the case, we had four inputs for DEA. The results of the study show that in all of these ministries, economic costs per person fell after moving to the joint building, which refers to effective management. We also found that in the Ministry of Economic Affairs and Communications, the dimensions of AGIL were not in balance. The authors believe that this is the reason why DEA deemed this ministry less efficient than the other ministries. Hence, our study confirmed that there is a direct connection between efficiency and sustainability.
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