The Quality of Public Spending Is Declining Across Advanced Economies

Wealth of Nations Index 2026 finds that most governments now deliver less value for citizens’ money than a decade ago

Warsaw / Brussels – A new international ranking delivers an uncomfortable message for governments across the developed world: public sectors are becoming larger and more expensive, but citizens are often receiving less in return.

The Wealth of Nations Index 2026, prepared by the Warsaw Enterprise Institute together with 20 partner think tanks from around the world, shows that in 27 out of 40 countries the state delivers less value for public money than it did in 2015. The United States, Norway and Switzerland remain at the top of the ranking, while Romania, Croatia, Greece and Bulgaria stand out as the decade’s most notable climbers.

Full results and interactive ranking: wni.wei.org.pl

Author: Szilvia Kecsmar

Now in its sixth edition, the Wealth of Nations Index offers an alternative way of looking at prosperity. Unlike GDP, which treats every unit of spending as equal, the WNI compares the strength of the private economy with the quality of public services delivered by the state. It assesses public-sector performance across seven areas: defence, internal security, infrastructure, environment, healthcare, schooling and higher education.

The premise is simple but politically important: public spending is not valuable in itself. What matters is what citizens receive in return — safer streets, effective institutions, functioning hospitals, reliable infrastructure, good schools and a state that supports rather than burdens economic life.

This year’s edition is the most international in the project’s history. It covers 40 economies, including EU and OECD countries as well as Ukraine, and allows readers to adjust the weight of the seven public-service categories according to their own priorities.

Key findings

The 2026 edition shows a broad deterioration in the quality of public spending. In most countries surveyed, citizens now receive less value from the state than they did ten years ago. The decline appears to be mainly a post-pandemic development. Public-service efficiency had generally improved until 2021, but since then the trend has reversed across much of the sample. Private-sector growth has also weakened significantly. Across the countries covered by the index, growth has roughly halved, while in more than a dozen economies it has turned negative.

The podium remains unchanged: the United States, Norway and Switzerland lead the ranking. At the other end of the table are Mexico, Colombia and Ukraine. Central and Eastern Europe provides some of the strongest long-term improvement. Romania is the standout case over the decade, followed by Croatia, Bulgaria and Greece.

Private-sector strength, public-sector weakness

The countries at the top of the ranking differ sharply in their political and economic models, but they share one important feature: a strong private economy supported by a state that, overall, performs its basic functions well. The United States leads the index primarily because of the strength of its private sector. Its public-service performance is much less impressive and ranks behind much of Europe. Norway and Switzerland, by contrast, combine high levels of private prosperity with strong public infrastructure, environmental quality and, in Switzerland’s case, world-leading higher education.

The long-term climbers tell a different story. In Central and Eastern Europe, progress has been driven largely by private-sector development rather than by a dramatic improvement in state performance. Romania, Croatia, Bulgaria and Greece show that catching-up economies can still generate significant gains, but the index also warns that growth based mainly on consumption rather than investment is unlikely to provide a stable foundation for future prosperity.

A warning for governments

The broader message of the index is clear: bigger government does not automatically mean better government. Across much of the developed world, public budgets have expanded, but the quality of outcomes has failed to keep pace. The authors argue that a free economy does not require the absence of the state, but it does require a state that is limited, effective and focused on the provision of essential public goods. Prosperity is created first and foremost by private capital, entrepreneurship and investment, while the role of the state is to provide the conditions in which that prosperity can grow.

“Our wealth is fundamentally created in the private sector. But for that sector to function, certain public goods have to be provided by the public sector. Our aim is to scrutinise whether the public sector is doing its job right,” said Sebastian Stodolak, Vice President of the Warsaw Enterprise Institute. Poland illustrates some of the same tensions identified by the index. Its economy has slowed while the public sector has continued to expand. Analysts point to legal instability, administrative burdens and an increasingly complex and unpredictable tax system as factors weakening the country’s growth potential.

About the Wealth of Nations Index

The Wealth of Nations Index is an annual project of the Warsaw Enterprise Institute, developed in cooperation with partner think tanks from around the world. It compares the strength of the private economy with the quality of public-sector outcomes in order to assess how effectively states convert public resources into real benefits for citizens.

The 2026 edition covers 40 economies, including the members of the European Union and the OECD, as well as Ukraine. For expert commentary or to arrange an interview about the Wealth of Nations Index 2026, journalists are invited to contact the Warsaw Enterprise Institute or one of the partner organisations.

Full results: wni.wei.org.pl

Cover photo credit: CEA Magazine. Edited with AI assistance using ChatGPT

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