The electoral bias: the political economy of subnational transfers in Latin America

This article examines whether transfers to local governments in Brazil, Mexico, Colombia and Chile have been allocated to obtain electoral advantage. A large panel data set and fixed-effects estimations uncover two types of manipulations: grant fluctuations along the municipal election cycle and biases towards aligned municipalities. Notwithstanding, there are significant cross-country differences. In Brazil, Colombia and Chile, mayors aligned with the central government coalition systematically benefit, especially ahead of elections, whereas in Mexico, political budget cycles do not discriminate in terms of partisanship. These results point to institutional conditions and the nature of electoral competition shaping distributive politics.