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Reversing the Political Resource Curse: Accountability and Regional Favoritism under Capital Windfalls

Author

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  • Lucas Argentieri Mariani
  • Mattia Longhi
  • Silvia Marchesi

Abstract

This paper examines how enhanced government accountability can mitigate the political resource curse during capital windfalls. We exploit two quasi-natural experiments in South Africa: the countrys 2012 inclusion in the Citigroup World Government Bond Index (WGBI) and the leak of a major corruption scandal twelve years earlier. Contrary to evidence linking resource booms to favoritism, we find that preferential grant allocations to municipalities connected to cabinet members declined following the sovereign inflow. Heightened salience of past corruption strengthened accountability, driving these results. Our findings underscore the critical role of accountability in promoting equitable resource distribution during financial inflows.

Suggested Citation

  • Lucas Argentieri Mariani & Mattia Longhi & Silvia Marchesi, 2025. "Reversing the Political Resource Curse: Accountability and Regional Favoritism under Capital Windfalls," Working Papers 552, University of Milano-Bicocca, Department of Economics.
    • Handle: RePEc:mib:wpaper:552
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    More about this item

    Keywords

    Resource curse; Accountability; Favoritism; Elite capture; South Africa.;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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