Democracy, Credibility, and Clientelism

Posted: 16 Sep 2008

See all articles by Philip Keefer

Philip Keefer

Inter-American Development Bank

Razvan Vlaicu

Inter-American Development Bank; University of Maryland

Multiple version iconThere are 2 versions of this paper

Date Written: October 2008

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)

Suggested Citation

Keefer, Philip and Vlaicu, Razvan, Democracy, Credibility, and Clientelism (October 2008). The Journal of Law, Economics, & Organization, Vol. 24, Issue 2, pp. 371-406, 2008, Available at SSRN: https://ssrn.com/abstract=1268650 or http://dx.doi.org/10.1093/jleo/ewm054

Philip Keefer (Contact Author)

Inter-American Development Bank ( email )

1300 New York Ave., NW
Washington, DC 20577
United States
202-623-1961 (Phone)

Razvan Vlaicu

Inter-American Development Bank ( email )

1300 New York Ave NW
Washington, DC 20577
United States

University of Maryland ( email )

3114 Tydings Hall
College Park, MD 20742
United States

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