A solution to the paradox of federal contributions for municipalities

Abstract

Thesis winning the First Place of the National Public Finance Award 2013 of the Center for Public Finance Studies of the Congress of the Union. This research starts from the premise that the bureaucrats in charge of the implementation of resources at the local level will act rationally when trying to maximize their budget when the deficiencies whose existence guarantees greater allocation of resources are not intentionally eliminated, in the absence of adequate incentives or direct controls. Currently, they operate in the face of the failure caused by the allocation formula that is exclusively proportional to the lag margin, which contains incentives for it to be preserved as a budget maximization strategy since it penalizes the reduction of the welfare lag. Therefore, the alignment of incentives is required from the design of the formula to stop penalizing achievement and to avoid harmful behaviors. One possible way to solve this problem would be the incorporation of fiscal incentives that enhance performance through the incorporation of welfare achievements as part of the components of the allocation formula. Thus, attention to deficiencies or achievement is transformed into "a good", instead of "a bad" as happens when the budget is cut due to the good performance of the local government.

DOI: 10.5281/zenodo.3823402

References

Aguilar, Genaro (2008), Métodos Econométricos para el Cálculo de la Capacidad Tributaria de Estados y Municipios de México, Documento de Trabajo, Centro de Estudios Demográficos, Urbanos y Ambientales, El Colegio de México, A. C., México.

Arellano, Rogelio (1994), Federalismo Fiscal: Retos y Propuestas. Fundación Mexicana Cambio XXI Luis Donaldo Colosio, México.

Bergstrom, T. C. y Goodman, R. P. (1973), “Private Demands for Public Goods”, American Economic Review, junio 1973, Vol. 63, pp. 280-296.

Boadway, R. (2004). “The theory and practice of equalization”, CESifo Economic Studies, 50(1), 211-254.

Cabrero, Enrique y Carrera, Ady (2007), El federalismo en los Estados Unidos Mexicanos, Nostra Ediciones. Serie Para entender, México.

CEFP, (2013) “El Gasto Federal Descentralizado en el Presupuesto de Egresos de la Federación 2007-2008” en Temas Relevantes sobre Finanzas Públicas 2007–2008, [en línea], [fecha de consulta: 28 Abril 2013]. Disponible en: <http://www.cefp.gob.mx/intr/edocumentos/pdf/cefp/ cefp0852007.pdf. Centro de Estudios de las Finanzas Públicas de la Cámara de Diputados, LX Legislatura.

Hernández, Fausto (1998), “Fiscal Federalism in Mexico: How Are We Doing?”, Memorias del II Congreso Internacional de Finanzas Públicas, Revista de la Universidad Nacional de La Plata, Argentina (número especial).

Latapí, Pablo y Ulloa, Manuel (2000), “El financiamiento de la educación básica en el marco del federalismo”, Ed. Fondo de Cultura Económica, México.

Levy, Santiago (1994), “La pobreza en México,” En F. Vélez, ed., Causas y políticas para combatir la pobreza en México, México, ITAM y FCE.

Martínez Andrade, Juan Carlos (2011) “La importancia de las capacidades administrativas y su impacto en las condiciones de pobreza y desigualdad”. Tesina para obtener el grado de Maestro en Administración y Políticas Públicas. CIDE.

North, Douglass (1991), “Institutions”, The Journal of Economic Perspectives, Vol. 5, No. 1.

Rawls, J. (1971), A Theory of Justice, Oxford, Oxford University Press.

Sen, Amartya (1973), (Expanded edition 1997.) On Economic Inequality, Oxford, Clarendon Press.

Sen, Amartya (1985), “Well-being, Agency and Freedom. The Dewey Lectures, 1984”, Journal of Philosophy, Vol. 82, pp. 169-221.

Sen, Amartya (1992), Inequality Reexamined, Cambridge, Massachusetts, Harvard University Press.

Tullock, Gordon (1975), “Competing for Aid”, Public Choice, Vol. 21, pp. 41-52.