How political insiders lose out when international aid underperforms: Evidence from a participatory development experiment in Ghana

Although participatory development often aims specifically to mitigate problems from political biases and party-based clientelism, the path is complicated and depends critically on the efficacy of underlying programs as well as how they interact with pre-existing institutions. We provide a framework to understand when participatory development is likely to generate politically biased benefits, showing that even if participatory aid is neutrally allocated, neutral benefit realizations occur only under specific circumstances. We apply this framework to a five-year randomized controlled study of a major participatory development program in Ghana, analyzing the program’s effects on participation in, leadership of, and investment by pre-existing political institutions, and on households’ overall socioeconomic well-being. We find the government and its political supporters acted with high expectations for the participatory approach: treatment led to increased participation in local governance and reallocation of resources. But the results did not meet expectations, resulting in a worsening of socioeconomic wellbeing in treatment versus control villages for government supporters. This demonstrates aid’s complex distributional consequences.