Rewarding Allegiance? Political Alignment and Fiscal Outcomes in Local Government

Christa Noel Brunnschweiler and Samuel Kwabena Obeng

Journal of African Economies, 2026, vol. 35, issue 1, ejaf013.

Abstract: We analyze how local governments’ political alignment with central government affects subnational fiscal outcomes. We use data from Ghana, which has a complex decentralized system that seeks to preclude political alignment effects. District Chief Executives (DCEs) are centrally appointed local administrators loyal to the ruling party, while district Members of Parliament (MPs) may belong to another party. A formula for central transfer distribution aims to limit the influence of party politics. Using a new dataset for 1994–2018 and a close election regression discontinuity design, we find that despite this system, there is evidence of politically-motivated local fiscal outcomes. Aligned districts receive lower transfers and have lower district expenditure and internally generated funds. Additional analyses show that successive district fragmentations appear to have weakened these political alignment effects, despite accusations of gerrymandering, and that effects are largely consistent under governments led by either of the two main political parties. We also uncover strong electoral cycle effects, with mid-term peaks in fiscal outcomes.

Date: 2026
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