GAO's View of the Federal Role in Improving State and Local Government Productivity

The GAO interest in productivity in the public and private sectors has increased recently because: productivity growth rates in the United States have slowed significantly in the past 10 years; productivity improvement enhances our ability to compete in world markets; improved productivity is a major factor in reducing and curbing inflation; and public sector productivity is increasingly important to our economy. In its report, "The Federal Role in Improving Productivity--Is the National Center for Productivity and Quality of Working Life the Proper Mechanism?" GAO concluded that the Federal government can affect national productivity growth and should take a more active role in this area. In the private sector, it can play a role through economic policies, tax laws, regulations, and financial support. With State and local government expenditures now comprising over l5 percent of the gross national product, the productivity of this sector can play a major role in the economy. The report "State and Local Government Productivity Improvement: What is the Federal Role?" pointed out that significant gains could be realized through improved productivity, but most State and local governments did not have effective productivity improvement programs. The Federal Government can help by providing technical and financial assistance for management improvement and by changing the Federal grants system to remove negative barriers and provide more positive incentives for productivity improvement.