Decentralization and efficiency in Spanish local government

This study analyzes the links between efficiency and the decentralization of competencies among Spanish local governments for years 1995 and 2000. The aim is pursued by considering a two-stage activity analysis model in which the performance of each municipality is first evaluated against other municipalities with a similar level of competencies and, in a second stage, it is compared with that of other municipalities for which decentralization remains at a more preliminary stage. The model also considers an index aimed at measuring whether tendencies towards higher (or lower) benefits from decentralization might exist over time. Results suggest that the type of technique considered plays a relevant role, since gains from higher decentralization are more apparent under the FDH (Free Disposable Hull) reference technology. However, regardless of the technique considered, on average, the gains from enhanced decentralization are improving over time