EconPapers    
Economics at your fingertips  
 

Subnational favoritism in development grant allocations: Empirical evidence from decentralized Indonesia

Gerrit J. Gonschorek

World Development, 2021, vol. 139, issue C

Abstract: Are public grant allocations biased toward the birth districts of governors, and, if so, what explains this favoritism? The allocation of budget authority to local government officials is a common trend around the developing world, but it is often criticized for transferring favoritism from the center to lower government levels. Using a unique panel data set of 410 Indonesian districts for the period 2005–2013, I exploit the discretionary nature of a government grant and data from a large amount of asynchronous local direct elections to investigate whether the birthplace of the provincial governor determines fund allocation to the district level. I show that birth districts of incumbent governors receive significantly larger shares of discretionary grants compared with the other districts within a province. I find that local favoritism is driven by governors with political history in the district office of their birth district and is limited by local electoral accountability. Classical pork-barrel politics, however, as reelection motives or formal political party ties to the district administration, do not explain local favoritism. These results illustrate the importance of non-discretionary institutional grant design and local democratization reforms in Indonesia’s political system. The country is a young democracy characterized by low ideological cleavages, little party loyalty, and the prevalence of money politics in its decentralized fiscal system. These features characterize a number of developing countries, yet contrast sharply to the established democracies for which subnational favoritism has been analyzed.

Keywords: Fiscal Decentralization; Subnational Favoritism; Discretionary Grants; Local Elections; Southeast-Asia; Indonesia (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0305750X20304265
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:139:y:2021:i:c:s0305750x20304265

DOI: 10.1016/j.worlddev.2020.105299

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-10-26
Handle: RePEc:eee:wdevel:v:139:y:2021:i:c:s0305750x20304265