Efficiency in application of oil royalties resources: identification of benchmark brazilian municipalities

In a context that presents an opportunity for academic discussion on the quality of receipt of oil royalty revenues and the efficiency in the use of these resources, research aims to identify which municipalities receiving oil royalties can be considered as benchmark in the application of budgetary resources. The relevance of this study lies in the academic and political discussions on the subject generated from the discovery of large oil reserves in the Brazilian territory and the consequent changes in the legislation on the model of sharing these resources. The Data Envelopment Analysis instrument (CCR model) was used to verify the efficiency in the allocation of public resources in 115 municipalities located throughout the Brazilian territorial extension, considering as input variables “tax revenues” and “current transfer revenues”, and as a product-variable, the “Municipal Human Development Index”, which was preceded by a cluster analysis. Results indicated that more than 70% of the investigated municipalities have an efficiency score of less than 0.4, suggesting a marked difference between the results achieved by the benchmark municipalities and the other municipalities not located at the efficiency frontier. These results are consistent with previous studies, which indicate that the resources destined to minimize the effects of negative externalities from oil extraction activities may not be generating the desired results regarding the improvement in human development of its receptors.