Essays on the political economy of clientelism and government performance

The purpose of my dissertation is to study the behavior of a government when it faces the competition of a political adversary and the consequences of its political strategy. The work is divided into two theoretical chapters. The first paper explores how public resources are allocated either as patronage or public goods as a result of political competition. The question is motivated by: (1) The persistence of clientelism and patronage under democratic systems and following democratization; (2) The inconsistency of the theoretical argument stating that a positive relationship exists between patronage, on one hand, and poverty and inequality, on the other hand, with the fact that patronage is not necessarily reserved for poor groups or economies with high income inequality. I formalize a spatial model to examine the determinants and mechanisms of clientelism and these theoretical inconsistencies. The model challenges the idea of a unidirectional negative effect of wealth, government efficiency and political competitiveness over the use of patronage. I find that, given that ix parties do not have complete information about citizens’ preferences, when variables such as competitiveness, efficiency or wealth threaten the ability of leaders to control specific groups of citizens, leaders relocate resources and increase patronage investment to maintain the power over them. The analysis also argues that poverty is more important than wealth distribution as a determinant of patronage. The second paper examines the effect that public trust in the political system has over government performance when the citizens decide to support one of two parties considering their past behavior as office holders. Two cases are compared: one in which information is perfect and the behavior in office can be directly observed by the citizens, and one where behavior is private information. I show that trust in the political system can encourage government performance when the difference of confidence between both parties is small. Otherwise parties behave opportunistically and government performance diminishes. Second, it is found that trust in the political system provide incentives for the parties to signal their ideological positions, reinforcing reputation and improving the evaluation of political campaigns. Lastly, I show that, low trust levels encourage political parties to maintain the private information structure; by contrast, when trust levels are high, political parties have an incentive to promote transparency of public officers’ behavior.