Advertisement

The technical efficiency of local economies in Mexico: a failure of decentralized public spending

  • Alejandro U. Becerra-Ornelas
  • Hector M. NuñezEmail author
Original Paper

Abstract

This work analyses the effect of the institutional design of public spending on technical efficiency. The model controls for technical efficiency using institutional variables for earmarked and autonomous revenues and assesses them using two stochastic frontier models. The main findings show that expenditures by Mexican municipalities, regardless of type, reduce the technical efficiency of local production. Results support the Brennan–Buchanan collusion hypothesis that decentralization generates an increase in government spending, but it does not translate to higher social welfare.

JEL Classification

R1 R5 H7 C2 

Notes

Acknowledgements

We would like to thank Antonio Álvarez Pinilla and Fausto Hernández Trillo for their valuable comments.

Compliance with ethical standards

Conflict of interest

Hector M. Nuñez declares that he has no conflict of interest. Alejandro U. Becerra-Ornelas declares that he has no conflict of interest.

Human and animal rights

This article does not contain any studies with human participants or animals performed by any of the authors.

References

  1. Adkins LC, Moomaw RL, Savvides A (2002) Institutions, freedom, and technical efficiency. South Econ J 69:92–108CrossRefGoogle Scholar
  2. Aguilar Gutiérrez G (2011) Eficiencia industrial en las regiones de México. EconoQuantum 7(2):93–113CrossRefGoogle Scholar
  3. Aigner D, Lovell CAK, Schmidt P (1977) Formulation and estimation of stochastic frontier production function models. J Econom 6:21–37CrossRefGoogle Scholar
  4. Álvarez Pinilla A, Arias Sampedro C, Orea Sánchez L (2003) Introducción al Análisis Empírico de la Producción. Universidad de Oviedo and Universidad de León, EspañaGoogle Scholar
  5. Arellanes Ramirez A (2011) Una solución a la paradoja de las aportaciones federales para los municipios (Ramo 33 Municipal). CIDE: Tesis de para obtener el grado de Maestro en Administración y Políticas PúblicasGoogle Scholar
  6. Aschauer DA (1989) Does public capital crowd out private capital? J Monet Econ 24:171–188CrossRefGoogle Scholar
  7. Bannister GJ, Stolp C (1995) Regional concentration and efficiency in Mexican manufacturing. Eur J Oper Res 80:672–690CrossRefGoogle Scholar
  8. Battese G, Coelli T (1995) A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empir Econ 20:325–332CrossRefGoogle Scholar
  9. Becerril-Torres O, Álvarez-Ayuso I, del Moral-Barrera L (2010) Eficiencia técnica de las entidades federativas de México. Economía, Sociedad y Territorio 10:485–511Google Scholar
  10. Belotti F, Ilardi G (2012) Consistent estimation of the “true” fixed-effects stochastic frontier model. CEIS Research Papers 231Google Scholar
  11. Braun FG, Cullmann A (2011) Regional differences of production and efficiency of Mexican manufacturing: an application of nested and stochastic frontier panel models. J Dev Areas 45:291–311CrossRefGoogle Scholar
  12. Brennan G, Buchanan JM (1980) The power to tax: analytical foundation of a fiscal constitution. Cambridge University Press, CambridgeGoogle Scholar
  13. Cabrero E (2001) La Experiencia Descentralizadora Reciente en México. Problemas y Dilemas. CIDE Working Papers División de Administración Pública 28Google Scholar
  14. Cabrero E, Carrera A (2000) Fiscal decentralisation and institutional constraints. Paradoxes of the Mexican Case. CIDE Working Papers División de Administración Pública 85Google Scholar
  15. Caudill SB, Ford JM (1993) Biases in frontier estimation due to heteroscedasticity. Econ Lett 41:17–20CrossRefGoogle Scholar
  16. Caudill SB, Ford JM, Gropper DM (1995) Frontier estimation and firm-specific inefficiency measures in the presence of heteroscedasticity. J Bus Econ Stat 13:105–111Google Scholar
  17. Cejudo G, Gerhard R (2010) La Rendición de Cuentas de Transferencias Intergubernamentales. El Caso del FAIS. UNAM: Instituto de Investigaciones JurídicasGoogle Scholar
  18. Chávez JC, López Ornelas LF (2013) Un enfoque no paramétrico para la descomposición de la productividad del trabajo en la industria manufacturera regional. Working Papers, Banco de México 2013-08Google Scholar
  19. Cobb C, Douglas P (1928) A theory of production. Am Econ Rev 18:139–172Google Scholar
  20. Duran-Fernández R, Santos G (2014) Road Infrastructure spillovers on the manufacturing sector in Mexico. Res Transp Econ 46:17–29CrossRefGoogle Scholar
  21. Farrel MJ (1957) The measurement of productive efficiency. J R Stat Soc Ser A 120:253–290CrossRefGoogle Scholar
  22. Faya Viesca J (2004) El Federalismo Mexicano. Régimen Constitucional del Sistema Federal. Porrúa, MéxicoGoogle Scholar
  23. García del Castillo R (1995) Análisis del municipio mexicano: diagnóstico y perspectivas. Partes I y II. CIDE Working Papers División de Administración Pública 32Google Scholar
  24. Greene W (2005) Reconsidering heterogeneity in panel data estimators of the stochastic frontier model. J Econom 126:269–303CrossRefGoogle Scholar
  25. Guizar Jiménez J (2004) Ramo 33: Fondo de Aportaciones Federales (Aspectos Normativos, Operativos y Financieros del Gasto Federalizado). Instituto para el Desarrollo Técnico de las Haciendas PúblicasGoogle Scholar
  26. Hadri K (1999) Estimation of a doubly heteroscedastic stochastic frontier cost function. J Bus Econ Stat 17:359–363Google Scholar
  27. Hernández R (2008) El centro dividido: la nueva autonomía de los gobernadores. El Colegio de MéxicoGoogle Scholar
  28. Hernández Trillo F (2016) Poverty alleviation in federal systems: the case of México. World Dev 87:204–214CrossRefGoogle Scholar
  29. Hernández Trillo F, Jarillo Rabling B (2007) Transferencias condicionadas federales en países en desarrollo: el caso del FISM en México. Estudios Económicos 22:143–184Google Scholar
  30. INEGI (2008) Censos Económicos 1994, 1999, 2004 y 2009 Instituto Nacional de Estadística y Geografía. http://www.inegi.org.mx/est/contenidos/Proyectos/ce/Default.aspx. Accessed 26 June 2017
  31. INEGI (2009) Censos de Población y Vivienda 1990, 1995, 2000, 2005, 2010 Instituto Nacional de Estadística y Geografía. http://www.inegi.org.mx/est/contenidos/proyectos/ccpv/default.aspx. Accessed 16 June 2017
  32. INEGI (2015) Sistema Estatal y Municipal de Bases de Datos. Instituto Nacional de Estadística y Geografía. http://sc.inegi.org.mx/cobdem/contenido.jsp?rf=false&solicitud. Accessed 1 May 2017
  33. Krugman P, Lizas-Elizondo R (1996) Trade policy and the Third World metropolis. J Dev Econ 49:137–150CrossRefGoogle Scholar
  34. Neyapti Bilin, Bulut-Cevik ZeynepBurcu (2014) Fiscal efficiency, redistribution and welfare. Econ Model 41:375–382CrossRefGoogle Scholar
  35. Oates WE (1972) Fiscal Federalism. Harcourt Brace Jovanovich, NYGoogle Scholar
  36. Peña Ahumada JA (2011) Manual de Transferencias Federales para Municipios. Secretaría de Gobernación, Instituto Nacional para el Federalismo y el Desarrollo MunicipalGoogle Scholar
  37. Pitt MM, Lee LF (1981) The measurement and sources of technical inefficiency in the Indonesian weaving industry. J Dev Econ 9:43–64CrossRefGoogle Scholar
  38. Reifschneider D, Stevenson R (1991) Systematic departures from the frontier: a framework for the analysis of firm inefficiency. Int Econ Rev 32:715–723CrossRefGoogle Scholar
  39. SCT (2015) Traza tu Ruta. Secretaría de Comunicaciones y Transportes. http://aplicaciones4.sct.gob.mx/sibuac_internet/ControllerUI?action=cmdEscogeRuta. Accessed 15 July 2017
  40. Shadbegian R (1999) Fiscal federalism, collusion, and government size: evidence from the states. Public Finance Rev 27:262–281CrossRefGoogle Scholar
  41. Timmons J, Broid D (2013) The political economy of municipal transfers: evidence from Mexico. Publius J Fed 43:551–579CrossRefGoogle Scholar
  42. Wallis JJ, Oates W (1988) Does economic sclerosis set in with age? An empirical study of the Olson hypothesis. Kyklos 41:397–417CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Pardee RAND Graduate SchoolSanta MonicaUSA
  2. 2.Department of EconomicsCentro de Investigación y Docencia EconómicasAguascalientesMexico

Personalised recommendations