Malfunctioning Democracies: Understanding Accountability Failures in Developing Countries

Claudio Ferraz and Frederico Finan

No 34198, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This chapter examines why democracies in the developing world frequently underperform in providing effective governance. We argue that these shortcomings stem from weaknesses in accountability mechanisms, which leave governments vulnerable to corruption, clientelism, and elite capture. Our framework distinguishes three accountability channels: vertical (citizens’ control over politicians), horizontal (checks and balances across state institutions), and diagonal (oversight by media and civil society). We synthesize the recent theoretical and empirical literature to assess how each channel operates, the conditions under which it succeeds, and why it often fails. A central finding is that accountability institutions rarely fail on their own; instead, they are actively undermined by political actors seeking to preserve rents and entrench power. This dynamic weakens electoral competition, erodes judicial independence, and curtails media freedom, producing a mutually reinforcing cycle of weak accountability. Additionally, we argue that sustainable reforms cannot be achieved by strengthening any single channel in isolation. Since vertical, horizontal, and diagonal accountability are interdependent, effective reform requires bolstering all three simultaneously. We conclude by discussing the implications of this perspective for future research, including the role of new technologies, political polarization, and candidate selection in reshaping accountability in developing democracies.

JEL-codes: D72 H11 K42 O43 P50 (search for similar items in EconPapers)
Date: 2025-09
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