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Governments of developing countries typically spend between 15 and 30 percent of GDP. Hence, small changes in the efficiency of public spending could have a major impact on GDP and on the attainment of the development's objectives. This paper presents a framework where data envelopment analysis (DEA) is used to assess the efficiency of expenditure in education and health sectors. More specifically, this paper assesses efficiency and seeks to establish a link between difference in efficiency level across countries and policy conditions. The data are used for a sample of member states of organization of the Islamic conference (OIC) over the 2000-20005 period. The findings show that under 5 year old mortality rates, malnourishment prevalence and immunization rates are the main determinants of deficiency in health sector of sample countries. Moreover, enrolment ratio, more specifically in secondary school, is the major factor that affects public spending efficiency in the education sector. In addition, results show that because of international aid programs, on average, countries in Africa are more efficient than those in Asia and Middle East.

Keywords: Efficiency, I21, I28, I28, H51, H52, H52, Health Care Expenditure, DEA JEL Classification: H51, I12

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