The Effects of Budgetary Solvency on the Dynamic Efficiency of Health and Education Services in large Brazilian Municipalities
Fiscal Federalism. Financial Condition. Budgetary Solvency. Health Efficiency. Education Efficiency. Dynamic DEA.
The idea that public goods and services should be provided in a decentralized manner, with the intention of ensuring that the specific social demands of each locality are met, is advocated by various scholars. In light of the provocations of Zafra-Gómez (2010), the challenges arising from externalities, fiscal imbalances, and other factors demonstrate that administrative and financial capacities can reflect the quality and efficiency in realizing the goods and services established by local governments. In this context, the present study seeks to understand the nascent research that links budgetary solvency and the efficiency of health and education services. Accordingly, this dissertation aimed to investigate the effects of budgetary solvency on the dynamic efficiency of health and education services provided by large Brazilian municipalities. The theoretical foundation for this dissertation was based primarily on the Financial Condition Theory and subsidiarily on the Fiscal Federalism Theory. The sample consists of the 250 largest Brazilian municipalities, measured by the population
stratified by the Brazilian Institute of Geography and Statistics (IBGE) in 2019, with an analysis period between 2011 and 2019. Through dynamic Data Envelopment Analysis (DEA) with a network structure (SBM Dynamic Network DEA), scores for overall efficiency and the health and education sectors were extracted. In the second stage of the research, through the Generalized Estimating Equations (GEE) method, the relationship between budgetary solvency, measured by the coverage indicator, and the efficiency of health and education services was investigated. The results pointed to a significant and positive relationship between budgetary solvency and the efficiency of health and education services, revealing that the efficiency of these services in large Brazilian municipalities depends on the quality of government budgetary solvency. Finally, it was observed that the variables of per capita debt, per capita GDP, demographic density, and municipality size also exert influence on the efficiency of public health and education services.