Government transfers and capital investments in Peruvian municipalities: the case of profits generated from natural resources

Abstract

The objective of this article is to evaluate the behavior of capital expense concerning the resource transfers for natural resources within the Peruvian municipalities. The analysis was based on income and expense information fron the National Municipality Records of Peru, recorded by the National Statistics and Informatics Center for 2014. A linear function was estimated for capital expense applying the ordinary minimum square method for the 1838 municipalities. Results show that the capital investments within the Peruvian municipalities is more focused on natural resource transfers when compared to any other type of income; nevertheless, it is also evidenced that a higher level of transfers doesn´t generate in higher investment levels in human capital.