Equitable allocation of ceilings on public investment : a general formula and a Brazilian example in the health sector
Musgrove, Philip
Funds for investment (or recurrent expenditure) should often be pre-allocated among competing entities - territorial units, sub-national governments or others-to give substantial weight to population but also to recognize greater per capita needs in some entities that in others. Such ceilings prevent better-prepared entities from acquiring all the resources, and thereby help protect weaker claimants. A general class of simple linear formulas can be used for this purpose: it minimizes arbitrary adjustments, allows for transparent and politically acceptable calculations, and guards against unreasonable extreme values. The procedure is illustrated with allocation of health investment in Brazil.
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