Political Finance in Developing States

Abstract

In developing countries, political activities are expensive. During campaigns, candidates and parties incur the costs of hiring staff, advertising, traveling and potentially buying votes. Between elections, citizens exert pressure to receive private benefits. Little is known, however, about how candidates and parties actually raise funds. These candidates often campaign on development platforms, promising citizens that they will deliver quality public goods. It is not clear, though, that the delivery of public goods is improving.

To examine these problems, I investigate the case of Ghana. Devoting one year to field research, I observed the actions of political actors in 11 districts. I interviewed over 200 local elites, including politicians, bureaucrats, private business owners and traditional chiefs. I administered surveys to bureaucrats and gathered data on local development projects.

Political financing and the quality of public-goods delivery are intertwined. Ghanaian politics is financed by an "iron square" of politicians, bureaucrats, construction contractors and party officials who covertly extract funds from public procurement. Their actions reduce the funds available to build development projects, hinder the ability of citizens to monitor project quality and drive honest contractors out of the market. This system of political financing is ultimately sustained by the kinship obligations that each player must satisfy.