Political Capture of Decentralization : Vote-Buying through Grants-Financed Local Jurisdictions

Abstract

A recent trend in decentralization in
 several large and diverse countries is the creation of local
 jurisdictions below the regional level -- municipalities,
 towns, and villages -- whose spending is almost exclusively
 financed by grants from both regional and national
 governments. This paper argues that such grants-financed
 decentralization enables politicians to target benefits to
 pivotal voters and organized interest groups in exchange for
 political support. Decentralization, in this model, is
 subject to political capture, facilitating vote-buying,
 patronage, or pork-barrel projects, at the expense of
 effective provision of broad public goods. There is
 anecdotal evidence on local politics in several large
 countries that is consistent with this theory. The paper
 explores its implications for international development
 programs in support of decentralization.