The Political Economy of the Tactical Allocation of Public Spending: Evidence from Spain

Abstract

Nevertheless, this peculiarity of the Spanish political system did not eliminate the incentives for governments to use pork-barrel policies. On the one hand, despite electoral results being centrally planned, Madrid’s limited capacity to intervene in society implied that elections outcomes had to be negotiated with the local elites, who demanded compensations (such as public funds) for their districts’ electoral support. On the other hand, the two-party system may be seen as a duopoly regime, in which opposition districts were actually those which did not respect the alternation system, and voted for either the dynastic party that was going to lose the election or for a third political force. Restoration Spain provides therefore an interesting case of a political system in which a dominating duopoly used pork-barrel strategies to persuade the electorate to change the sign of their votes in every electoral call. In this setting, two kinds of political economy models may be relevant to analyze pork-barrel in Restoration Spain. One can see the Spanish Restoration as a semi-democratic regime ruled by a duopoly that furthered its political goals by using the geographical allocation of public resources. More specifically, governments showered resources on those districts that were loyal to the alternation system, and starved the rebellious ones. This would be similar to a typical semi-democratic system, although one in which the hegemonic political force was not a single party but a duopoly. On the other hand, given the importance of local elites, non-partisan motivations may also offer a partial description of the political process. In non-partisan models, the distribution of public funds reflects the influence and ability of individual MPs, who compete for administrative resources to reinforce their links with their electorates. Indeed, bringing home the pork increases MPs’ reputation with local elites (Levitt and Snyder, 1995; Levitt and Poterba, 1999; Milligan and Smart, 2005).