Clientelism and Aid

23 Pages Posted: 19 Apr 2006

See all articles by Georges Casamatta

Georges Casamatta

Toulouse School of Economics (GREMAQ-CNRS); Centre for Economic Policy Research (CEPR)

Charles Vellutini

University of Toulouse I - Advanced Research in Quantitative Applied Development Economics (ARQADE); ECOPA

Date Written: January 2006

Abstract

Using a model of probabilistic voting, we analyse the impact of aid on the political equilibrium in the recipient country or region. We consider two kinds of politicians: the benevolent one is interested in promoting social welfare whereas the other one is clientelistic, his only goal being to maximize his chances of being elected. We find that the impact of aid on the political equilibrium and therefore on the quality of the policy (using the utilitarian social welfare as a benchmark) in the recipient country ultimately depends on the value of the elasticity of marginal consumption, which governs how the sensitivity of voters to a clientelistic allocation of resources (over a socially optimal one) varies with the level of consumption. When the elasticity is low, the probability that the clientelistic politician be elected increases and the expected policy outcome gets further away from the socially desirable policy set. This case of substitution of policy quality by aid can help to explain the poor performance of conditionality in improving policy. Perhaps more surprising is the opposite case, which arises for high values of the elasticity of marginal utility: an increase in aid worsens the clientelistic candidate's election prospects and thus improves the expected policy set.

Keywords: Clientelism, aid, voting

JEL Classification: D72, H23, H41, H71

Suggested Citation

Casamatta, Georges and Vellutini, Charles, Clientelism and Aid (January 2006). CEPR Discussion Paper No. 5441. Available at SSRN: https://ssrn.com/abstract=897803

Georges Casamatta (Contact Author)

Toulouse School of Economics (GREMAQ-CNRS) ( email )

Manufacture des Tabacs (bât. F)
21 Allee de Brienne
31000 Toulouse
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Charles Vellutini

University of Toulouse I - Advanced Research in Quantitative Applied Development Economics (ARQADE) ( email )

21 Allee de Brienne
Toulouse, 31000
France

ECOPA ( email )

8, esplanade Compans-Caffarelli
Toulouse, 31000
France

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