How Political Insiders Lose Out When International Aid Underperforms: Evidence from a Participatory Development Experiment in Ghana. A guest lecture by Professor Kate Baldwin of Yale University.
Participatory development strategies are designed to mitigate problems of clientelism and bias in pre-existing government institutions. However, the institutions and actors empowered through participatory development approaches interact with pre-existing political institutions in complex ways, with both complementarities and displacement possible along political lines. Using a five-year study of participatory development institutions randomized across 97 village groups in Ghana, we analyze effects of the new institutions on participation in, leadership of and investment by pre-existing political institutions in the study area. We find that the new participatory development institutions were broadly inclusive and politically unbiased. As intended, they significantly increased participation in pre-existing political institutions, though only for government supporters. But these new institutions disappointed in their ability to improve investment and infrastructure compared to pre-existing institutions. Critically, both the government and its political supporters appear to have had especially high expectations for the new participatory development institutions. As a result of differential expectations and substitution effects along political lines, government supporters became significantly worse off when exposed to the new institutions. This result challenges a large literature assuming government supporters uniformly benefit from international aid, adding nuance to our understanding of international aid’s distributional consequences.