The political economy of intergovernmental grants: evidence from a maturing democracy

Abstract

We evaluate the impact of political forces in the allocation of intergovernmental grants in Portugal, as it matured from a young to an established democracy. Using a large and unexplored dataset we show that political variables condition the granting system, and that their importance changed over time. While tactical manipulation in the distribution of grants among municipalities seems to exist only in the early years of democracy, opportunistic effects are stronger in the latter years. We argue that the latter effect is due to a change in the political environment and to the electorate’s lack of information on intergovernmental grants.