Does the system of allocation of intergovernmental transfers in senegal eliminate politically motivated targeting?

Abstract

While there is a large body of literature on the determinants of allocation of intergovernmental fiscal transfers in developed countries, this kind of study is still very limited for developing countries, especially Sub-Saharan countries. Using an original micro-level public finance panel data from Senegal, we address three issues: (1) Does the Senegalese allocation system of fiscal transfers conform to the guidance of normative theory, in particular, to the equity principle? (2) Does this allocation system eliminate politically motivated targeting of transfers? (3) If not, what kind of political factors explain the horizontal allocation of fiscal resources? By rigorously estimating panel data for 67 local governments (communes) from 1997 to 2009, our results tend to show that equity concerns do not affect the allocation of intergovernmental grants in Senegal, leading to the conclusion that the resources distribution system does not comply with the dictates of normative theory. Moreover, we find evidence that political considerations influence the horizontal allocation of transfers. In particular, our analysis suggests that the distribution of central resources follows pattern of tactical redistribution more than patronage, swing communes being targeted while partisan communes are not. © The author 2011. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved.