Texto para discussão N° 002: Can Private Provision of Public Goods be Effective? Corruption Combat in Brazilian Municipalities and the Brazilian Social Observatory Network

Abstract: This paper aims to evaluate the effectiveness of private initiative in monitoring public administration and in combating corruption. Specifically, we estimate the impact of the introduction of the units of the Observatório Social do Brasil on several categories of per capita public expenditures of municipalities in the southern region of Brazil. Using information in the 2002-2017 period, we implement a differences in differences strategy based on the gradual introduction of OSBs in a set of municipalities over the period of analysis. The results show weak statistical significance for public expenditure, indicating limited effectiveness of OSB’s operation. For smaller municipalities (with less than 50,000 inhabitants), we find statistically significant savings for two groups of expenditure: “freely distributed materials” and “services from individuals”. This is consistent with the oversight of the OSB units being more effective in municipalities that attract less attention from centralized state supervision agencies (TCEs).

Authors: Renato Nunes de Lima Seixas and Guilherme Armando de Almeida Pereira.