Abstract

LEON-CAZARES, Filadelfo; CERNAS ORTIZ, Daniel Arturo  and  ORTIZ MEDINA, Ana Eduwiges del Rosario. Federal Transfers and Local Government Efficiency. Intersticios sociales [online]. 2021, n.22, pp.149-172.  Epub Nov 03, 2021. ISSN 2007-4964.

Though one goal of distributing federal resources is to increase government efficiency, previous research suggests, paradoxically, a negative association between federal transfers (FTs) and local government efficiency. In this context, the aim of this study was to empirically analyze the relation between FTs and the efficiency of local governments. To achieve this, we analyzed two key moments of this process. First, using a Data Envelopment Analysis we calculated relative efficiency scores for each one of the 300 most representative municipalities in Mexico in 1990, 2000, 2010, and 2015. Second, the per capita amounts of FTs of efficient municipalities were compared to those of non-efficient ones using a three-way analysis of variance (size, year, efficiency). Contrary to government goals, and versions documented in the literature, results indicate that there is no statistically significant relation between the amounts of FTs and local government efficiency. Moreover, it appears that there is room to increase non-tax revenues in inefficient municipalities. Based on these findings, it is suggested that the criteria underlying resource allocation at the municipal level be reevaluated.

Keywords : relative efficiency; Mexican municipalities; federal transfers; non-tax revenues; capital investment.

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