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Is Local Beautiful? Fiscal Decentralization in Mexico

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Author Info

  • Hernández-Trillo, Fausto
  • Jarillo-Rabling, Brenda

Abstract

Summary In this study, we present evidence from Mexico regarding the weak effectiveness of federal transfers and low absorption capacity of sub-national governments in poor areas, when political opportunistic behavior is present. We show that the distribution of conditional transfers is discretionary, due to a monitoring problem, and deficiency in institutional frameworks. This may be the cause for opportunistic behavior by political elites. The results suggest that more funds are distributed to areas with more voters. In addition, localities with a higher number of swing voters also receive more resources. These results show that the poorest populations receive the least amount of money from the community-based development funds.

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File URL: http://www.sciencedirect.com/science/article/B6VC6-4SW85HS-1/2/1667d9e1d6533b6b120387881f949f1f
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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 36 (2008)
Issue (Month): 9 (September)
Pages: 1547-1558

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Handle: RePEc:eee:wdevel:v:36:y:2008:i:9:p:1547-1558

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Web page: http://www.elsevier.com/locate/worlddev

Related research

Keywords: decentralization federal transfers elite capture community development funds Latin America Mexico;

References

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  1. Galasso, Emanuela & Ravallion, Martin, 2005. "Decentralized targeting of an antipoverty program," Journal of Public Economics, Elsevier, vol. 89(4), pages 705-727, April.
  2. Wallis, John, 2001. "The Political Economy of New Deal Spending, Yet Again: A Reply to Fleck," Explorations in Economic History, Elsevier, vol. 38(2), pages 305-314, April.
  3. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
  4. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," Boston College Working Papers in Economics 545, Boston College Department of Economics, revised 14 Feb 2003.
  5. Dilip Mookherjee & Pranab K. Bardhan, 2000. "Capture and Governance at Local and National Levels," American Economic Review, American Economic Association, vol. 90(2), pages 135-139, May.
  6. Svensson, Jakob, 2003. "Why conditional aid does not work and what can be done about it?," Journal of Development Economics, Elsevier, vol. 70(2), pages 381-402, April.
  7. Wallis, John Joseph, 1998. "The Political Economy of New Deal Spending Revisited, Again: With and without Nevada," Explorations in Economic History, Elsevier, vol. 35(2), pages 140-170, April.
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Cited by:
  1. Wu, Alfred M. & Wang, Wen, 2013. "Determinants of Expenditure Decentralization: Evidence from China," World Development, Elsevier, vol. 46(C), pages 176-184.

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