This paper analyzes the influence of the electoral environment on the development of institutional capacities at the level of local government in Mexico. Drawing on the assumption that establishing professional, merit-based and impersonal administrative systems entails political costs to government leaders and their electoral activists, the article investigates whether electoral competition and party alternation have stimulated the development of necessary institutional capacities in municipal governments. The empirical evidence seems to support both hypotheses. It also suggests the possibility that strong local political
machines deter the ability of incumbent leaders to reduce clientelism in the operation of public bureaucracies.