Short and Long-Term Evaluation of Efficiency and Quality. An Application to Spanish Municipalities

Abstract

This article analyses efficiency and quality levels in Spanish local governments and their determining factors through the application of the Data Envelopment Analysis (DEA) methodology. It aims to discover to what extent inefficiency arises from both quality considerations and external factors beyond the organisation’s control, or alternatively, how much inefficiency is due to inadequate resource management. As a component of inadequate resource management, we test the existence of political-budgetary cycles in the temporal evolution of inefficiencies. The results show that on the whole there is still a wide margin within which local government efficiency and quality levels could be increased, although it is revealed that a great deal of inefficiency is due to exogenous or non-controllable factors. In particular, it has been found that the size of the municipality, the per capita tax revenue, the per capita grants and the amount of commercial activity are some of the factors related with local government efficiency.