Efficiency in government refers to the ability to provide the greatest public good from the available resources.

Although efficiency in the private sector may be judged in solely economic terms, it cannot be so simply evaluated in the public sphere of government. Unlike the business community, the purpose of government is not to generate profits. Since government has many duties in society including the allocation of scarce resources and the provision of social services such as health care, its efficiency must be evaluated in broader, more distinct terms than profits and losses. Furthermore, government is constrained by the public, in terms of what is desired and what will be tolerated, in ways that agents of the private sector are not. The government is accountable to the people and therefore goals cannot be set by the government alone; governments have to keep the citizens satisfied or at least pacified.

There are three definitions of efficiency in relation to government: administrative, efficiency, policy efficiency, and service efficiency. Administrative efficiency refers to effective management of the political system. It encompasses good organization and efficient productivity. In comparison, policy efficiency represents the idea of making the right political decisions. It involves the selection of appropriate programs to achieve government objectives. Whereas, service efficiency is manifested in the effective provision of services to the public, responsiveness to public opinion, and so on. The efficiency of government must be measured in terms of all three facets of efficiency.