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Political machines and the curse of public resources in subnational democracies

Andrés Cendales, Nestor Garza and Andres Arcila

Journal of Economic Studies, 2021, vol. 49, issue 4, 665-682

Abstract: Purpose - This paper argues that decentralization reforms in Colombia, implemented since the 1980s, have led to the decentralization of political clientelism rather than its demise. Clientelism is a system of political and economic institutions that turns every local democracy into an extractive political institution. The authors theoretically demonstrate that an increase in public resources will increase corruption. Design/methodology/approach - The authors develop and test a subnational public choice model, where clientelism in elections and corruption in public administration constitute a stable long-term institutional equilibrium. The model comprises two linked subgames: electoral tournament and corruption in public policy. The model makes two predictions that currently oppose predominant approaches: (1) increasing the severity of jail sentences to electoral crimes increases their price and the predominance of machine politics, instead of improving the quality of electoral tournaments and (2) increasing local governments' public finance increases clientelism in elections and corruption in public administration. Findings - The authors find evidence in favor of the theoretical model of curse of public resources, using difference-in-differences estimation with a database 2016–17 of Colombia's 1,034 municipalities. This country is well-suited for our analysis because it has a long-term commitment to formal democratic processes (since 1958), while plagued by endemic corruption and clientelism problems. Originality/value - (1) The theoretical approach is innovative and disruptive of current models on the problem, (2) the model builds upon the Colombian situation, a country with prominent corruption and political violence problems regardless of its relatively long-term commitment with free elections (since 1958) and (3) the theoretical discussion is tested using a comprehensive set of difference-in-differences estimations.

Keywords: Game theory; Clientelism; Corruption; Local public policy; Political machines; Curse of public resources; Difference-in-differences (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1108/JES-03-2021-0148

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