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Allocative Efficiency

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PPGPortal > Home > Concept Dictionary > A > Allocative Efficiency
 
Allocative Efficiency 

The capacity of the budget system to distribute resources on the basis of the government’s priorities and program effectiveness

(Schick, A. "The Changing Role Of The Central Budget Office" OECD Journal on Budgeting 1(1), 2001. p.20.) 

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Allocating resources is the stock in trade of the central budget office; this is what the office does when it reviews agency bids for resources and recommends how much each should receive. In traditional budget arrangements, the process is open-ended; agencies can ask for as much as they want. Invariably, the total demanded is in excess of available resources, thereby giving the central budget office the lead role in deciding where increments should be allocated and whether any reallocations should be made. In fact, the greater the excess of bids over resources, the greater the role of the central budget office in operationalizing the government’s priorities.

References

Schick, A. "The Changing Role Of The Central Budget Office" OECD Journal on Budgeting 1(1), 2001. p.20. 

 

     

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