Application of Economic Principles in Public Sector Organization Management

Abstract

This study was motivated by the complex challenges in managing public sector organizations, particularly those related to resource constraints and increasing public demands for efficiency and accountability in service delivery. The objective of this study is to analyze the application of economic principles such as resource allocation efficiency, cost-benefit analysis, and performance-based budgeting in public sector policy and management. The method used is a descriptive qualitative approach with literature review techniques, which allows researchers to explore relevant literature, statistical data, and policies in depth. The results of the study show fundamental differences between the public and private sector economic approaches, as well as the importance of targeted resource allocation to create adaptive and effective governance. Data on infrastructure investment, state budget expenditure, and regional public spending show a tendency for allocation to remain dominated by routine expenditure, with a relatively low proportion of productive investment. The integration of economic principles through digitalization, fiscal reform, and strengthening bureaucratic capacity is crucial for creating a more responsive, efficient, and welfare-oriented government.