Who benefits? Intergovernmental transfers, subnational politics and local spending in Ecuador

AbstractWe examine the role of political alignment and the electoral business cycle on municipality revenues in Greece for the period 2003–2010. The misallocation of resources for political gain represents a waste of resources with significant negative effects on local growth and effective decentralization. The focus of our analysis is municipality mayors since they mediate the relationship between central government and voters and hence can influence the effectiveness of any potential pork-barrelling activity. A novel panel data set combining the results of two local and three national elections with annual municipality budgets is used to run a fixed-effects econometric model. This allows us to identify whether the political alignment between mayors and central government affects municipality financing. We examine this at different stages of local and national electoral cycles, investigating both direct intergovernmental transfers (grants) and the remaining sources of local revenues (own revenues, loans). We find that total revenues are significantly higher for aligned municipalities in the run-up to elections due to higher intergovernmental transfers. We also find evidence that the 2008 crisis has reduced such pork-barrelling activity. This significant resource misallocation increases vertical networking dependency and calls for policy changes promoting greater decentralization and encouraging innovation in local revenue raising.

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When Formulas Go Political: The Curious Case of Japan's Financial Index

Japanese Journal of Political Science ◽

10.1017/s1468109917000093 ◽

2017 ◽

Vol 18 (3) ◽

pp. 407-425 ◽

Cited By ~ 2

Author(s):

TAYLOR C. MCMICHAEL

Keyword(s):

Economic Indicators ◽

Distributive Politics ◽

Significant Determinant ◽

Intergovernmental Transfers ◽

General Account ◽

Electoral Support ◽

Level Data ◽

Financial Index ◽

Geographically Targeted

AbstractScholars of distributive politics in Japan have shifted from large items in the general account budget to more geographically targeted spending known as intergovernmental transfers. However, a portion of the funds sent to prefectural governments are ostensibly determined by the apolitical ‘financial index’. However, even though the financial index is included in most studies of intergovernmental transfers, only slight attention focuses on the financial index and its determination. Using prefectural level data on intergovernmental transfers, economic indicators and electoral support for the LDP, this research shows that the LDP possesses strong incentives to manipulate the index and that politics is a significant determinant of the financial index.

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