Reversing the Political Resource Curse: Accountability and Regional Favoritism under Capital Windfalls

Lucas Argentieri Mariani, Mattia Longhi and Silvia Marchesi

No 552, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: This paper examines how enhanced government accountability can mitigate the political resource curse during capital windfalls. We exploit two quasi-natural experiments in South Africa: the countrys 2012 inclusion in the Citigroup World Government Bond Index (WGBI) and the leak of a major corruption scandal twelve years earlier. Contrary to evidence linking resource booms to favoritism, we find that preferential grant allocations to municipalities connected to cabinet members declined following the sovereign inflow. Heightened salience of past corruption strengthened accountability, driving these results. Our findings underscore the critical role of accountability in promoting equitable resource distribution during financial inflows.

Keywords: Resource curse; Accountability; Favoritism; Elite capture; South Africa. (search for similar items in EconPapers)
JEL-codes: D72 F32 H63 H72 H77 R11 (search for similar items in EconPapers)
Pages: 67
Date: 2025-04
New Economics Papers: this item is included in nep-dev
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Persistent link: https://EconPapers.repec.org/RePEc:mib:wpaper:552

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