Political budget cycles and intergovernmental transfers in a dominant party framework: Empirical evidence from South Africa

Presenter(s): Verena Kroth, London School of Economics

Abstract / Description:

Are intergovernmental transfers to South African provinces used to implement political budget cycles (PBCs)? This paper integrates the existing PBC literature with two distributive politics models, in order to test whether South African intergovernmental transfers are used to target swing provinces or core support provinces prior to an election. The empirical analysis of a unique panel dataset comprising South Africa's nine provinces over the period 1995-2007 generates the following results. First, in the year before an election, core support provinces receive higher transfers from the central government. Second, this increase is driven by the conditional grant, which is the non-formula-based component of total intergovernmental transfers. Third, the increase in provincial revenue in core support provinces displays compositional patterns, with increased spending on welfare, roads and safety in the year before an election. These findings offer a first analysis of PBCs in South Africa and provide evidence for the hypothesis that both the level and composition of intergovernmental fiscal transfers are subject to the politically motivated targeting of core support provinces. This shows that even in a dominant party framework an incumbent may choose to target regions strategically and implement PBCs through the use of intergovernmental grants. *Refreshments will be served.*

Thu, 01 Dec 2011 -
13:45 to 16:00

4.29 CSSR, Leslie Social Science, Upper Campus