Discussion paper

DP14537 How Political Insiders Lose Out When International Aid Underperforms: Evidence from a Participatory Development Experiment in Ghana

Participatory development is designed to mitigate problems of political bias in pre-existing local
government but also interacts with it in complex ways. Using a five-year randomized controlled
study in 97 clusters of villages (194 villages) in Ghana, we analyze the effects of a major
participatory development program on participation in, leadership of and investment by preexisting
political institutions, and on households’ overall socioeconomic well-being. Applying
theoretical insights on political participation and redistributive politics, we consider the
possibility of both cross-institutional mobilization and displacement, and heterogeneous effects
by partisanship. 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 international aid’s complex distributional consequences.

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Citation

Baldwin, K, D Karlan, C Udry and E Appiah (eds) (2020), “DP14537 How Political Insiders Lose Out When International Aid Underperforms: Evidence from a Participatory Development Experiment in Ghana”, CEPR Press Discussion Paper No. 14537. https://new.cepr.org/publications/dp14537