Relationship between Transparency and Efficiency in Municipal Governments: Several Nonparametric Approaches

Abstract The aim of this paper is to determine whether transparency influences efficiency of public services delivery and, therefore, the economic performance of municipal governments. First, and taking into account previous research, we select the appropriate inputs and outputs to calculate efficiency using several nonparametric methodologies such as Data Envelopment Analysis (DEA), DEA-boostraping, Free Disposal Hull (FDH), order-m and order-α partial frontiers. Second, the results are related to different variables, with transparency playing a prominent role. In general, transparency influences efficiency, although this sometimes depends on the specific indicator used to measure the latter and on the methodology utilized to calculate it. In particular, our results show that the greater the economic and financial transparency and the more information there is on public service contracts and on urban planning and public works, the more efficient the municipality is, i.e. the more optimally the scarce resources of public administrations are managed. This is relevant for policy makers, as they have to implement policies that make administrations more transparent, which will facilitate the supervision of both users of services and upper governmental authorities (regional/central).