Summary In this study, we present evidence from Mexico regarding the weak effectiveness of federal transfers and low absorption capacity of sub-national governments in poor areas, when political opportunistic behavior is present. We show that the distribution of conditional transfers is...

Access to adequate start-up capital has been identified as an important deterrent to microenteprise development and growth. Using firm level data from Mexico's National Survey of Microenterprises, we estimate a stochastic frontier production function with inefficiency effects related to the main...