Does Elite Capture Matter? Local Elites and Targeted Welfare Programs in Indonesia

Alatas, Vivi; Banerjee, Abhijit; Hanna, Rema; Olken, Benjamin A.; Purnamasari, Ririn; Wai-Poi, Matthew

doi:10.1257/pandp.20191047

Cited by 76 publications

(67 citation statements)

References 19 publications

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“…This literature has had a number of important theoretical and empirical contributions. Some examples are Bardhan and Mookherjee (2000), Fisman (2001), Dal Bó andDi Tella (2003), Robinson and Torvik (2005), Finan and Schechter (2012), Alatas, Banerjee, Hanna, Olken, Purnamasari, and Wai-Poi (2013). Our paper has also close connections with the literature that has studied the determinants of political dynasties and how institutional reforms affect the continuity in power of these elites Snyder (2009), Querubin (2011)).…”

Section: Introductionsupporting

confidence: 59%

The Non-Democratic Roots of Elite Capture: Evidence From Soeharto Mayors in Indonesia

Martínez-Bravo¹,

Mukherjee²,

Stegmann³

2017

Econometrica

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IN THIS SUBSECTION, we present a theoretical model that formalizes the mechanism that, we argue, is behind our empirical results. This model is an adaptation of the one presented in Acemoglu and Robinson (2008). We implement a number of modifications to their setting to adapt it to the Indonesian context. Furthermore, we impose a number of assumptions that make the exposition easier and help us focus on the main result of interest. We refer the interested reader to Acemoglu and Robinson (2008) for a thorough description of the interactions between the agents of the model and for additional insights and results.Consider a society made up of an elite and citizens. The country is divided into equallysized districts, each with a population of M elites. The elite and citizens regularly contest power in each district. The group that wins power makes decisions over economic institutions. We denote by s t ∈ {E C} the group that is in power in period t, with E referring to the elite and C referring to citizens. When the elite is in power, they choose their most beneficial set of economic institutions obtaining payoff R e . When the citizens are in power, the set of economic institutions that citizens choose leads to a payoff of R c for the elite. We define R = R e − R c > 0 as the difference between these two payoffs.The game starts as a dictatorship and the elite is in power in all districts. However, for reasons exogenous to the local power dynamics, the country becomes democratic. Local-level elections are scheduled in all districts. We assume that the group that wins the election remains in power forever, and as a result, the subsequent regime becomes an absorbing state. 1The electoral equilibrium is determined by the relative level of political power of both groups. Political power is defined by the interaction of de jure political power and de facto political power. Since citizens are the most numerous group, democratization grants citizens with a baseline amount of de jure political power equal to p > 0. The overall level of political power that citizens have at the time of the local election isMonica Martinez-Bravo: mmb@cemfi.es Priya Mukherjee: pmukherjee@wm.edu Andreas Stegmann: stegmann@cemfi.edu.es 1 Our static framework is in sharp contrast to the model in Acemoglu and Robinson (2008) which is fully dynamic. The result we focus on is also present in a dynamic version of the model.

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Section: Introductionsupporting

confidence: 59%

The Non-Democratic Roots of Elite Capture: Evidence From Soeharto Mayors in Indonesia

Martínez-Bravo¹,

Mukherjee²,

Stegmann³

2017

Econometrica

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“…39 In Indonesia, past research suggests some departures although overall adherence to official beneficiary lists has typically been quite high (World Bank 2012). Such targeting rule violations may prove beneficial if they allow the community to exert their greater ability to identify the very poor (Alatas et al 2012) or if the capture of programme benefits by local elites is limited or generates relatively small welfare losses (Alatas et al 2013a). Future research should combine the methods for evaluating targeting effectiveness that we advocate in this paper with an assessment of eligibility adherence in the field to identify which effects prevail overall.…”

Section: Discussionmentioning

confidence: 99%

“…Results available upon request. 15 For more detailed information on the design and sampling of the survey, which was originally collected to compare different targeting methods in a high-stakes experiment, see Alatas et al (2013a and b). 16 According to nationally representative household survey data from 2010 (Susenas), within the entire Indonesian population, about two-thirds of households have at least one child aged below 16 years old.…”

Section: The Suseti and Its Link With The Udbmentioning

confidence: 99%

“…5 This includes evaluations of targeting effectiveness (e.g., Skoufias et al 2001;Banerjee et al 2007), as well as most of the optimal targeting literature, which can be divided between studies comparing different targeting methods and studies focusing on the design of PMT formulas for ranking. Studies comparing the relative advantages of different targeting methods (e.g., , Banerjee et al 2007, Alatas et al 2012and 2013a, and Karlan and Thuysbaert 2013 find that no method clearly dominates in terms of commonly used objective performance measures. However, in general, the evidence suggests that community targeting is best for identifying the very poorest households.…”

Section: Introductionmentioning

confidence: 99%

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Finding the Poor vs. Measuring Their Poverty: Exploring the Drivers of Targeting Effectiveness in Indonesia

Bah¹,

Bazzi

Sumarto³

et al. 2018

The World Bank Economic Review

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Centralized targeting registries are increasingly used to allocate social assistance benefits in developing countries. There are two key design issues that matter for targeting accuracy: (i) which households to survey for inclusion in the registry; and (ii) how to rank surveyed households. We attempt to identify their relative importance by evaluating Indonesia's Unified Database for Social Protection Programs (UDB), among the largest targeting registries in the world, used to provide social assistance to over 25 million households. Linking administrative data with an independent household survey, we find that the UDB system is more progressive than previous, program-specific targeting approaches. However, simulating an alternative targeting system based on enumerating all households, we find a one-third reduction in undercoverage of the poor compared to focusing on households registered in the UDB. Overall, there are large gains in targeting performance from improving the initial registration stage relative to the ranking stage.

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“…There is also a risk local elite capture of local public goods associated with decentralization. And in this context, Alatas et al (2013) document an Indonesian case study in which they find that local officials seemed to capture some transfers in villages where transfers are large relative to private consumption, although the rent produced is less than 1% of the welfare produced by the social programs. This is linked to the relevance of the design of intergovernmental transfers for the performance of the sector (e.g.…”

Section: On the Empirical Evidence Of The Relevance Of Institutions Imentioning

confidence: 99%

17. Institutions for Infrastructure in Developing Countries: What we know . . . and the lot we still need to know

2020

The Handbook of Economic Development and Institutions

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The paper surveys the very heterogeneous economic literature on the scope and limits of efforts to match institutional constraints and needs, on the one hand, and infrastructure policy and project designs, on the other, to increase the odds of improving service access, affordability and quality. It includes a categorization of the main theoretical approaches and a brief summary of what they each contribute to the design of institutions. It summarizes the most robust conclusions from theory and evidence as well as the main gaps between theory and practice that would justify a solid research agenda. The information collected is also used to the possibility of conducting sector diagnostics.

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Does Elite Capture Matter? Local Elites and Targeted Welfare Programs in Indonesia

Cited by 76 publications

References 19 publications

The Non-Democratic Roots of Elite Capture: Evidence From Soeharto Mayors in Indonesia

The Non-Democratic Roots of Elite Capture: Evidence From Soeharto Mayors in Indonesia

Finding the Poor vs. Measuring Their Poverty: Exploring the Drivers of Targeting Effectiveness in Indonesia

17. Institutions for Infrastructure in Developing Countries: What we know . . . and the lot we still need to know

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