The influence of financial dependence on the governance effectiveness in Brazilian municipalities

The research is based on the premise that public administration must be effective for the provision of goods and services to society to achieve its primary goal of meeting the population’s demands for quality services. Using the lens of Fiscal Federalism Theory, the study sought to contextualize the mechanisms of fiscal decentralization and observe how the dynamics of resource distribution and responsibilities can affect outcomes. The main objective was to analyze the influence of financial dependence on the effectiveness of the management of Brazilian municipalities. A model was developed considering effectiveness (IEGM) as the dependent variable, financial dependence as the independent variable, and GDP per capita and municipal population as control variables. The results show the negative influence of financial dependence on effectiveness. The low autonomy in generating own resources exposes municipalities to volatility and uncertainties in securing funds, compromising their ability to provide services to society.

Keywords:
fiscal federalism; fiscal transfers; effectiveness; financial dependence; municipalities.