This study analyses how technological, political and institutional factors affect the performance of municipalities in improving welfare in Brazil in the period 1989- 2000. The model adopts a stochastic production frontier conditioned to variables related to the provision costs and those that may explain efficiency. The most stable result indicated that there were scale and density economies as measured by, respectively, total population and urban population, and that the breaking up of municipalities reduced efficiency. The wider is the vote margin against the elected governor the lower is the municipal public expenditure, suggesting a patronage pattern in the allocation of states? free resources. Yet the higher is the participation of resource transferred into total expenditure the lower is the efficiency. However, the competitiveness in the political market, the existence of municipal councils and the degree of computational and outsourcing of services have not affected efficiency.
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