Gasto Público Social, Gobernanza y Desarrollo Humano: Una Aplicación con Datos Municipales de Bolivia: 1994-2008[Social Public Expenditure, Governance and Human Development: An Application with Municipal Data of Bolivia: 1994-2008]

In this opportunity, we analyze the relationship among public social spending, governance and human development based on cross-sectional sample of data from more than 300 municipalities of Bolivia. Considering the municipal statistical information, we estimate a multiple linear regression model with instrumental variables, using least squares in two stages. We have instrumentalized the public social expenditure variable through an efficiency government index (governance). In the first stage, we have found that government efficiency explains the differences in total social public expenditure per capita executed between 1997 and 2005. In the second stage, we find a positive effect of total social public expenditure per capita executed between 1997 and 2005 on human development, measured in 2005. Therefore, estimates reveal that higher levels of social public spending tend to generate a higher level of human development in municipalities where government efficiency is higher. In quantitative terms, the results reveal that, keeping the rest of the variables constant and considering the importance of government efficiency, if the total social public expenditure per capita executed during 1997 to 2005 had increased by Bs 100 per capita, then human development measured in 2005, it would have increased by 6.6%.