Resource Allocation in Power-Sharing Arrangements: Evidence from Lebanon

Mounir Mahmalat (), Sami Atallah and Wassim Maktabi
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Mounir Mahmalat: The Policy Initiative
Sami Atallah: Founding director of The Policy Initiative
Wassim Maktabi: Researcher at The Policy Initiative

No 1624, Working Papers from Economic Research Forum

Abstract: Power-sharing arrangements not only allocate political power but also economic resources from valuable state functions among powerful elites. Two broad hypotheses emerge from existing literature for how elites allocate such resources. Elites would either distribute the control over valuable institutions or share the rents they generate. This article investigates which mechanism prevails by focusing on a major source of such resources: public procurement of large infrastructure projects. We analyze an original dataset of infrastructure procurement contracts in Lebanon and investigate which politically connected firms receive larger contracts than nonconnected firms. We find that firms receive inflated contracts only when they are connected to elites with a “seat at the table” at the board of the implementing agency, rather than the wider set of powerful political elites. We argue that resource distribution depends on elites’ access to important institutional functions, rather than other conceivable mechanisms of resource sharing. By penetrating key positions with loyal personnel, elites serve as brokers in collusive networks, or cartels, that succeed in undermining a process as complex as infrastructure procurement

Pages: 28
Date: 2022-12-20, Revised 2022-12-20
New Economics Papers: this item is included in nep-ara, nep-net and nep-pol
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