What drives local governments’ digital transformation in Brazil?

Abstract

In the context of increasing demands for efficient and equitable public service delivery, digital transformation has become essential for local governments, particularly within federations marked by inequality. This study investigates the factors driving digital transformation in Brazilian municipalities—a country with significant regional disparities and varying administrative capacities. The objective is to identify which economic and technical-administrative variables influence the digital maturity of local governments. Using data from 4,265 municipalities collected in 2023, the study constructs a Digital Transformation Index encompassing technological infrastructure and digital service provision. Multiple linear regression models assess the relationship between digital transformation and variables such as fiscal autonomy, IT expenditures, bureaucratic quality, and mayors’ educational profiles. Results indicate that municipal revenue generation and IT spending positively correlate with digital transformation, while reliance on intergovernmental transfers is negatively associated. Additionally, better-educated civil servants and mayors are more likely to lead digitally advanced municipalities. However, when accounting for regional and population size controls, many of these associations lose statistical significance, underscoring the role of broader structural disparities. The findings suggest that economic and human resource capacity are important but insufficient alone; a more coordinated national strategy is necessary to reduce regional inequalities and support local digital transformation.