Online ISSN 2286-0266
Print ISSN 1223-0685
Copyright © 2018
Œconomica by SOREC
Delia-Raluca ŞANCARIUC
Sciences Po Paris

This paper analyses the clientelistic behaviour of governments and provides new evidence that politically aligned localities are favoured by the central government in the allocation of public funds. It focuses on the case of Romania, an ex-communist, developing country, where this issue represents a controversial topic, being strongly criticized by the media, but, until now, never analysed in a rigorous scientific manner. I use a sharp regression discontinuity design and a new data set on reserve fund transfers and subsidies allocated by the central government to localities, as well as data on the outcomes of local elections, focusing on close electoral races. I find, for some specific years, a strong alignment effect in the case of reserve fund transfers, indicating that the central government provides more transfers to localities led by mayors who belong to one of the parties forming the government coalition. However, this is not the case for subsidies, were I find no alignment effect, the main reason being that, compared to reserve fund transfers, the allocation of subsidies follows a more complex and less discretionary process, requiring also the approval of the Parliament. I argue that the allocation of public funds to localities is used by the central governments as a tool for gaining political capital, as local mayors play a very important role in influencing electoral outcomes, at the expense of a balanced regional development.

ŒCONOMICA no. 2/2017
Keywords: public funds, resource allocation, electoral process, regional development
JEL: H20, H77
Do They Buy Your Votes With Your Own Money? Evidence from an Ex-communist, Developing Country