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Democracy, Credibility, and Clientelism

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  • Razvan Vlaicu
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    Abstract

    Despite having adopted the political institutions of established democracies, democratizing countries display a systematically different pattern of fiscal outcomes. This article attributes these differences to the low credibility of electoral promises in new democracies. We study a model of electoral competition where candidates have two costly means to make themselves credible: spending resources to communicate directly with voters and exploiting preexisting patron-client networks. The costs of building credibility are endogenous and lead to higher targeted transfers and corruption and lower public good provision. The analysis demonstrates that in low-credibility states, political appeals to patron-client networks may be welfare enhancing, but in the long run, they delay political development by discouraging direct appeals to voters that are essential for credible mass-based political parties. The model explains why public investment and corruption are higher in younger democracies and why democratizing reforms had greater success in Victorian England than in the Dominican Republic. ( JEL D720, H110, H300, H400, H500, O100) The Author 2007. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

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    File URL: http://hdl.handle.net/10.1093/jleo/ewm054
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    Bibliographic Info

    Article provided by Oxford University Press in its journal The Journal of Law, Economics, & Organization.

    Volume (Year): 24 (2008)
    Issue (Month): 2 (October)
    Pages: 371-406

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    Handle: RePEc:oup:jleorg:v:24:y:2008:i:2:p:371-406

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    Cited by:
    1. Vlaicu, Razvan & Verhoeven, Marijn & Grigoli, Francesco & Mills, Zachary, 2014. "Multiyear budgets and fiscal performance: Panel data evidence," Journal of Public Economics, Elsevier, vol. 111(C), pages 79-95.
    2. Keefer, Philip & Neumayer, Eric & Pl├╝mper, Thomas, 2011. "Earthquake Propensity and the Politics of Mortality Prevention," World Development, Elsevier, vol. 39(9), pages 1530-1541, September.
    3. Jeroen Klomp & Jakob Haan, 2013. "Political budget cycles and election outcomes," Public Choice, Springer, vol. 157(1), pages 245-267, October.
    4. Mizuno, Nobuhiro, 2013. "Political Structure as a Legacy of Indirect Colonial Rule: Bargaining between National Governments and Rural Elites in Africa," MPRA Paper 48771, University Library of Munich, Germany.
    5. Fox, Sean, 2014. "The Political Economy of Slums: Theory and Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 54(C), pages 191-203.
    6. Devarajan, Shantayanan & Khemani, Stuti & Walton, Michael, 2011. "Civil Society, Public Action and Accountability in Africa," Working Paper Series rwp11-036, Harvard University, John F. Kennedy School of Government.
    7. Libman, Alexander, 2013. "Natural resources and sub-national economic performance: Does sub-national democracy matter?," Energy Economics, Elsevier, vol. 37(C), pages 82-99.
    8. Sue, Eddie D.W. & Wong, Wei-Kang, 2010. "The political economy of housing prices: Hedonic pricing with regression discontinuity," Journal of Housing Economics, Elsevier, vol. 19(2), pages 133-144, June.
    9. Grigoli, Francesco & Mills, Zachary & Verhoeven, Marijn & Vlaicu, Razvan, 2012. "MTEFs and fiscal performance: panel data evidence," Policy Research Working Paper Series 6186, The World Bank.
    10. Ernesto Calvo & Gergely Ujhelyi, 2012. "Political Screening: Theory and Evidence from the Argentine Public Sector," Working Papers 201303201, Department of Economics, University of Houston.
    11. Thaize Challier, M.-Christine, 2010. "Socio-political conflict, social distance, and rent extraction in historical perspective," European Journal of Political Economy, Elsevier, vol. 26(1), pages 51-67, March.

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