Technical efficiency of local public institutions in Colombia

Using a theoretical recursive model based on cognitive synergy measured by five dimensions (economical, judiciary, civil conflict, geography, and urban) as restrictions to allow better results on institutional quality, the research shows a link between economic, social, and political environment with public efficiency in local governments. Impacts on local public government efficiency of different levels of advancement for each dimension are estimated for 23 major cities in Colombia in 2010 by implementing a Data Envelopment Analysis followed by a Tobit model similar to what has been proposed in recent literature of public efficiency analysis. The main findings showed an average of public local efficiency of 76% when an output oriented DEA model is adjusted using a Financial Public Performance index (FPI) as input and the Multidimensional Poverty Index (MPI) as output. After correcting for technology differences public average efficiency score reduces to 60% meaning that local government can increased their performance by 40% in poverty results measured by IPM with the same level of inputs measured by FPI. In order to narrow gap performances between cities reductions in unemployment levels, informal markets and transaction costs of doing business are required, there is also a positive significant impact of internet access and a negative impact of increasing urban population. The decentralization process is showing a negative impact over local public efficiency measured by the distance in square kilometers towards the central government capital. Other dimensions relevant such as the civil conflict and the judiciary system efficiency show negative and positive impacts as expected however they are not statically significant. Constraint aggregate effect on cognitive synergy developments over institutional quality reduces is impact to 38% when calculated following the structural equation on institutional determinants defined by the theoretical model.