The political determinants of resource allocation in Mexican municipalities: the fund for municipal social infrastructure

Abstract

This research explores the political factors that affect the allocation of antipoverty funds in Mexican municipalities. Specifically, it analyses whether the adoption of FAISM, a decentralised fiscal fund intended to reduce poverty, did, in fact, help provide better services for the poor or if it was capture by political influence. In this sense, my work addresses a classic question of when and how political institutions can effectively improve the allocation of antipoverty funds. In the last decade, an ambitious decentralisation process was promoted in Mexico as a way to strengthen local governance and hence improve basic service provision. The idea was to limit politician‟s influence on resource allocation and return decision making to the people. By looking at more than 57,000 FAISM projects carried out in 122 municipalities of Estado de Mexico between 1998 and 2006 my work argues that political influence could not be circumvented and clientelism remained as a common political practice to allocate antipoverty funds. My findings demonstrate that the three major political parties relied on FAISM to obtain political benefits through the allocation of private goods. Regarding the effects of democratic institutions, my work demonstrates that greater party competition increases the probability that FAISM was used for public benefit. Similarly, there is a propensity towards greater spending on clientelism during elections. Although these factors influence the allocation of municipal funds, my work does not find concluding evidence to test the impact of fund allocation and poverty reduction. My dissertation makes three important contributions to the literature. Substantively, it qualifies the premise that clientelistic linkages between voters and politicians prevail and shows the conditions under which local politicians strategically allocate antipoverty funds for political gain. A second, methodological, contribution is the use of a more refined measure of social spending at the municipal level by looking at the split between public and private goods. Finally, this dissertation seeks to inform the longstanding debate about the ways in which democratic politics can contribute to effective poverty reduction.