What are some examples of opportunity cost in the public sector?

In the public realm, the concept of opportunity cost is likely considerably more complex than making a choice between vocational and academic education investment. Evaluating the costs and benefits would also include all the other choices a government has to make to keep society functioning. Political pressure would play a major part in making those choices and may not be the best choice from an opportunity cost perspective.

When analysing the opportunity cost of allocating resources between primary education and higher education one point to keep in mind is time lag of outcome. It is easier and takes less time to observe the results in primary education. Metrics like gross enrollment ratio and literacy rate are more prominent and easier to portray. Higher education's impact is often uncertain, difficult to measure or takes longer time(as in research) to observe.

when it comes to the less developed contexts (like Sudan case), wastage of money in public budget, can't traced by calculations of Items' expenses, Rather, by applying the public administration equation (Absence or unclear TORs+ Self Diligence - The Accountability = Wastage of Money), and the matter is getting worse, when no commitment to the on-line indicative & informative reporting system, agreed upon based on the principles of the Information Management and no commitment to the Laws, Regulations, Policies and Procedures constitute the Legal & Admin. Frameworks govern and organize public Finance & Administration, including the production of the systematic & regular public budgets (plans)

While this is technically correct, these allocation choices are foundational to the government's political leanings. In a democracy, the government that is elected by the majority has presented a platform that resonates with the electorate. It may not be the best allocation in terms of opportunity cost. It's also very difficult to measure many of the social outcomes or vague terms such as well-being, to assign a relevant value. Opportunity cost is one way to make those allocation decisions but probably not the best way.

We should also keep in mind the political economy when analysing healthcare and the current state of affairs of the state. If the government feels that it stands to gain more showcasing to its population that it is strong and decisive in comparison to its hostile neighbours it may choose to spend more on defense foregoing healthcare expenditure. Again if the country is undergoing a prolonged health crisis it makes more sense for the government to increase healthcare expenditure. What matters to the government in power in most cases is how it can manage perceptions of its actions and showcase them to be for the benefit of the nation utilising minimum economic resources.

Environmental degradation is a concern for all governments in the world. But governments in developing countries especially cannot sacrifice development for the protection of environment in entirety. Taking environment friendly steps often entails increasing costs which makes products expensive and less competitive. Opportunity cost analysis play a big role in determining the extent of degradation tolerable for the government for development.

Tax revenue is one of the major sources of income for governments. Governments generally impose taxes to redistribute the excess wealth to the poorer sections through social welfare schemes. Too much tax may result in lower revenues as has been portrayed in the Laffer Curve. Too much tax may also lead the rich to park their excess money in tax havens or to not disclose their income accurately.

One implication of the rise of the public sector has been the increase in tax pressure. What effects has this had? The higher the corporate income tax rate, the lower, other things remaining constant, the investment rate and the capital/labor ratio (the average value of capital per worker), and the lower, therefore, , the product per worker, with capital falling proportionally more than the product, also an apparently concave long-term relationship between the product per worker and the capital per worker. The reason for the above is that this tax falls on the marginal benefit, so it modifies the incentives: it affects the decision to invest through its impact on the marginal productivity of capital, net of taxes.

Running increasing deficits year on year may cause the public debt to be unsustainable leading the country to default on its interest payments. This can cause severe economic crises and hardships for the people of the country. Hence it is imminent for the government to exercise fiscal responsibility in its public expenditure and deficit.

If we assume the only way to reduce public debt is the taxation, then the tax collection of the national government equaled the 50% of that carried out by the entire public sector in global GDP. If you assume that the productive components of public spending and those strictly necessary to maintain the order required for the development of productive activity have amounted a positive effect. With this assumption, it can be deduced that the fiscal pressure associated with unproductive public spending went negative. The above means that the expansion of the public sector, in its unproductive component has usually meant that society now has a higher savings rate, a level of capital per worker and a product per worker.

Referring strictly to simulations of impacts of increases in the tax rate, the percentage loss of social welfare would be almost similar to the fall in the savings rate. This is a loss of Public efficiency, since it does not imply alterations in the rate of increase in productivity. But there is something else, the growth of the public sector became more intense in the last 50 years. In my opinion, this had a similar effect to that of protectionism: at first production was stimulated (and, perhaps, innovations in new products and processes to meet the growing demand), but later successful producers probably perceived greater profitability in production to meet the greater public expenditure than in maintaining the innovative effort.