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Analyzing the Performance of Local Government in Mexico: A Political Explanation of Municipal Budgetary Choices

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  • Moreno, Carlos

Abstract

This paper analyzes the budgetary choices of municipal governments in Mexico. Using a panel data approach that includes most municipalities in the country throughout the 1990-2001 period, I investigate to what extent local democracy has stimulated municipal governments to increase their investments on basic infrastructure projects, rather than expanding their bureaucratic apparatuses. My findings suggest that only under a decentralized policy setting, the competitiveness of the electoral arena has a positive influence on the provision of local public goods. I also find evidence that basic infrastructure spending increases when local elections are held, and when the local mayor belongs to a different party than the state governor.

Suggested Citation

  • Moreno, Carlos, 2005. "Analyzing the Performance of Local Government in Mexico: A Political Explanation of Municipal Budgetary Choices," University of California at San Diego, Center for U.S.-Mexican Studies qt3v39q4j0, Center for U.S.-Mexican Studies, UC San Diego.
    • Handle: RePEc:cdl:usmexi:qt3v39q4j0
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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    2. Alesina, Alberto & Hausmann, Ricardo & Hommes, Rudolf & Stein, Ernesto, 1999. "Budget institutions and fiscal performance in Latin America," Journal of Development Economics, Elsevier, vol. 59(2), pages 253-273, August.
    3. Sour, Laura, 2004. "El sistema de transferencias federales en México: Premio o castigo para el esfuerzo fiscal de los gobiernos locales urbanos [The system of federal transfers in Mexico: a reward or punishment for th," MPRA Paper 50444, University Library of Munich, Germany.
    4. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
    5. Fiszbein, Ariel, 1997. "The Emergence of local capacity: Lessons from Colombia," World Development, Elsevier, vol. 25(7), pages 1029-1043, July.
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