Policy-Oriented Insights to Enhance Effectiveness and Efficiency of Public Spending: Comparing the Determinants of Subsidies to Railways in key European Countries

This paper aims to reconstruct the total amount of public expenditure on railways in key European Countries. The analysis bases on data referring to: Italy, Great Britain, Germany, France and Sweden. The main objective is to evaluate the appropriateness of transfers granted in view of containing and rationalizing public expenditure, improving overall system efficiency and protecting competition in a market that has, at least from a legal point of view, fully liberalized segments. Because of the lack of reliable data, previous literature struggled in identifying the determinants of public subsidies granted to national railways across Europe. This paper provides a synthetic index of the size of the rail sector (SISR) that justifies subsidies and estimates the subsidies from the public finances (SP) that would be paid in a specific country adopting the standard of another country or a European average. This paper concludes that there is plenty of room for a deeper investigation into the spending review of the public spending on railways. Finally, this study has major policy implications as it makes available harmonized and comparable data serve scholars and political institutions.