Exploring government spending in Brazil

Public procurement plays a key role in allocating limited budgetary resources to public service delivery. This project studies a puzzling phenomenon: in developing countries like Brazil, substantial shares of the federal and sub-national budgets are not spent despite clear needs for additional resources to improve the quality of public services or to fund emergency spending in contexts of crises. In line with a growing literature that documents the potential unintended effects of the enforcement of rules on bureaucratic performance, we investigate the role of procurement risk - when passive waste is misinterpreted as active waste – as a driver of unspent public funds by Brazilian municipal governments. Leveraging a unique collaboration with the Brazilian Association of Municipal Health Secretaries (CONASEMS), we randomise interventions to municipal health secretaries that decrease procurement risk. We investigate the effects on the perceptions of policymakers and actual behaviour change, studying consequences for budget execution and health outcomes in the context of the COVID-19 pandemic in 2020 and 2021.

The project aims to address the following questions:

Do interventions to support local bureaucrats to undertake compliant, competitive procurement procedures decrease their perceived risk of making procedural mistakes that could be framed as wrongdoing?
Do such interventions increase planned spending, delivery rates and payment rates within health transfers from the federal government?
Do they improve public service delivery, as measured by health outputs and outcomes?

Published on: 17th August 2021