Performances in COVID-19 Management across Countries: Do Subnational Finances Matter?

The spread of the COVID-19 pandemic has emphasized the role of governments in a public health emergency not only in developing countries but in the developed world as well. This paper has a two-fold objective. First, we investigate the efficiency of COVID management using state-level data from three of the worst affected countries, the USA, India, and Mexico, in three time periods in the pre-vaccine phase. Next, we explore the extent to which state government financial, sociodemographic, and governance indicators can explain the difference in efficiency. We use a two-stage non-parametric method. The first stage comprises meta frontier analysis to derive efficiency scores for each state. We analyze state governments in these countries together (grand frontier) and separately (group frontier). Overall, grand efficiency continuously increased from August to November 2020. The grand efficiency scores of Mexico and the USA gradually increased on 3rd October and 29th November 2020. The results reflect that the USA was holding the leading position in terms of COVID-19 pandemic management at that time. In terms of group efficiency, American states performed consistently well with respect to their own country as well as other countries. However, if we compare the grand and group efficiency scores of all three countries, we find that states in India and Mexico performed well in their own countries but worse than USA states in terms of the global scenario. The states of India always performed better within their own country than the states of the other two countries. The second analytical stage uses an exploratory median analysis to investigate the impact of different indicators on efficiency. State finance variables are positively associated with the grand efficiency score for all three time periods, while the association is negative for the expenditures to own revenue ratio and expenditures to total revenue ratios, debt ratios with respect to different fiscal indicators, and percentage of health expenditure over total expenditures and GSDP. These patterns are less consistent among countries when we look at group efficiency over time. We find a positive association of per capita total revenue with group efficiency scores for all countries over all time periods.