Subnational favoritism in development grant allocations: Empirical evidence from decentralized Indonesia

Are public grant allocations biased toward the birth districts of governors, and, if so, what explains this favoritism? The allocation budget authority to local government officials is a common trend around developing world, but it often criticized for transferring favoritism from center lower levels. Using unique panel data set 410 Indonesian period 2005–2013, I exploit discretionary nature and large amount asynchronous direct elections investigate whether birthplace provincial governor determines fund district level. show that incumbent governors receive significantly larger shares grants compared with other within province. find driven by political history in office their limited electoral accountability. Classical pork-barrel politics, however, as reelection motives or formal party ties administration, do not explain favoritism. These results illustrate importance non-discretionary institutional design democratization reforms Indonesia’s system. country young democracy characterized low ideological cleavages, little loyalty, prevalence money politics its decentralized fiscal features characterize number countries, yet contrast sharply established democracies which subnational has been analyzed.