within the Organisation for Economic Co-operation and Development (OECD)—particularly the Australian, British, Dutch, Finnish, and Norwegian governments—have made significant progress toward linking expenditures and outcomes as part of their efforts to increase publicsector accountability to taxpayers.<sup>6</sup> Most of these countries have produced guidelines for their civil servants with varying amounts of sectoral detail but with enough incentives to begin measuring their activities as any business unit would. The public sector is importing longtested cost-accounting rules from the private sector—at least in some part of the activities of the public sector such as regulated industries.

But progress is slow. Those leading the charge for change recognize quite explicitly (in widely available public documents) the limitations of their efforts.<sup>7</sup> Although it would be overly simplistic, one could nevertheless argue that the two barriers to the implementation of new guidelines are posed, first, by governments that have never properly measured sectoral expenditures, and, second, by governments that have never measured sectoral outcomes well either! The problem is _this_ basic, even in countries trying to produce quantitative assessments of public-sector performance.

This is not to say there are no data. Every government has a budget. In fact, most governments also have “realized” budgets, reporting _ex post_ their actual expenditures. But these budgets are usually intended only to ensure the macroeconomic sustainability of total government expenditures. They are not really designed to track down specific sectoral expenditures—or many other resource-allocation decisions for that matter, which is to say, the distribution between capital and recurrent expenditures. That is a problem for anyone trying to assess the cost-effectiveness of sectoral policies.

The problem is not, however, only with expenditure or cost data. Measuring outcomes is also a serious problem. Once more, it is not that countries do not generate data on outcomes; it is just that the data are not really that helpful to get a sense of the effectiveness of sectoral resource allocation. The coverage of sectoral outcomes is always systematically partial both in terms of indicators of performance or results (e.g., the diversity of transport, health, or education services vs. infrastructure) and in terms of the dimensions of performance (e.g., performance should not only be measured in terms of quantity but also in terms of quality and affordability). For instance, it is surprising to see that about 20 years after the socalled Water Decade was announced, no one is reporting the average quality of water delivered or the number of hours per day that water is available in given countries, or even in a representative sample of cities.

> 6 For an overview of OECD initiatives, see OECD, Country Facts Sheets, GOV/PGC (2006), April 6, JT03207081. The _Atkinson Review_ may be the best documented such initiative, with its own website <u>http: //www.statistics.gov.uk/about/data/methodology/specific/PublicSector/Atkinson/final_report.asp.</u>

> 7 These government websites are the strongest evidence available to the international community.

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