This paper evaluates the efficiency of the municipal districts of the Northeast and Southeast of Brazil in what concerns to the use of public resources. The question is to learn if the municipal administrators allocate those resources to guarantee the maximum of public services or, alternatively, if for a certain offer of public goods the expense is minimum. Using non-parametric techniques to measure productive efficiency, the paper analyzes the relationship between the size of the municipal district and its efficiency levels, besides investigating the existence of scale economies. Results show that, for the immense majority of the municipal districts with population of less than 15 thousand, the low efficiency levels are explained by the presence of increasing scale economies. The results, although exploratory, suggest that the current decentralization policy in Brazil doesn't promote the efficient use of the public resources: the proliferation of small municipalities drives to the increase of the medium costs of the municipal services.
