Poverty or Politics: A Study of Targeted Community-Based Development Programs in Indonesia

Abstract

This paper aims to study the politics of economic redistribution. Basically, there are two competing models of redistributive politics in the literature. First, Cox and McCubbins (1986) suggest that incumbent governments should distribute economic benefits toward core voters because they are considered as a safer investment compared to other groups. Second, Lindbeck and Weibull (1993) and Dixit and Londregan (1996) develop electoral competition models in which incumbent governments attempt to get political support by disproportionately channeling particularistic benefits to swing voters. I use the PNPM Mandiri community-driven development program in Indonesia to test whether they are any political motives behind the allocation of PNPM Mandiri block grants from the central to lower-level governments. The study finds that presidential politics does matter in the distribution of block grants. Districts that were major supporters of the incumbent president in the past election are largely rewarded, whereas swing districts are not targeted