Good Governance and Efficacy of Public Spending: Case of OIC Healthcare and Education Expenditures

Do government expenditures often yield the expected improvement in social outcomes? This paper asserts that the good governance indicators can explain differences in attainment to a good health and education outcomes in OIC countries. This paper analyses the linkage between three concepts; "Good Governance", "Public Spending" and "Social Outcomes" For this propose, we measure the governance level by "corruption" and "quality of bureaucracy". Public spending becomes more effective in health and education sectors in countries with good governance; also, public spending has less impact on health and education outcomes in poorly governed countries. By using OIC countries data in period 1991-2005, we found that public health and education spending has a stronger negative effect on child mortality and stronger positive effect in raising primary education attainment in countries, which have good governance.