The electoral incentives of investment allocation

Haakon Gjerløw

Working Paper


Theories of autocratic co-option rest on at least two central, but contested assumptions: That legislators are sufficiently empowered to demand concessions from the president, and that even unfree elections are competitive enough to discipline political elites. In the case of public investments in non-democratic countries and developing democracies, I find support for both of these crucial assumptions. Using data on georeferenced investment projects across Africa, I find that these investments are more in line with the president's preferences prior to presidential elections, but more in line with legislators' preferences close to legislative elections. Taken together, the findings strongly suggest that legislators in such systems do have the power to demand concessions from president, and that unfree elections can discipline political elites.



It could, of course, be that this has nothing to do with elections. However, the shift in investment location only happens right before elections.

Electoral brokers

A common problem in developing countries is an asymmetry between political leaders and local populations, which creates two problems when politicans want to buy voters with pork investments. First, investments are vulnerable to freeriding, since voters that benefit from an investment can still support a challenging candidate he or she prefers, without fear of repercussion. Second, politicians lack information about the needs of the local populations, and what types of investments that are more likely to be appreciated by voters. With a network of intermediate brokers, both of these problems can be solved, in that brokers can gather the necessary information, inform voters that the politician fought for them to get this investment, and monitor and sanction the parts of the electorate that fail to vote ``correctly''. But brokers have incentives to exaggerate the need for investments from their patron, in order to acquire more resources. Trust is therefore of fundamental importance for such political networks. And politicians are more likely to find trustworthy individuals among close friends from their home regions.

The effect of elections depends on the formula

If investment allocation is to be understood as a strategic reponse to elections and the incentives they produce, we should also observe that behavior changes if incentives changes. And it does. Only majoritarian elections affect investment allocation, and not proportional ones. This is because it is much more difficult to politically capitalize on investments with proportional formulas.

Different effects of different formulas

Chinese investments in Africa