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Political Finance in Developing States Political Finance in Developing States The Harvard community has made this article openly available. Please share how this access benefits you. Your story matters Citation Luna, Joseph P. 2016. Political Finance in Developing States. Doctoral dissertation, Harvard University, Graduate School of Arts & Sciences. Citable link http://nrs.harvard.edu/urn-3:HUL.InstRepos:33493275 Terms of Use This article was downloaded from Harvard University’s DASH repository, and is made available under the terms and conditions applicable to Other Posted Material, as set forth at http:// nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of- use#LAA Political Finance in Developing States A dissertation presented by Joseph P. Luna to The Department of Government in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the subject of Political Science Harvard University Cambridge, Massachusetts May 2016 c 2016 Joseph P. Luna All rights reserved. Advisor: Professor Robert H. Bates Joseph P. Luna Political Finance in Developing States Abstract In developing countries, political activities are expensive. During campaigns, candidates and parties incur the costs of hiring staff, advertising, traveling and po- tentially buying votes. Between elections, citizens exert pressure to receive private benefits. Little is known, however, about how candidates and parties actually raise funds. These candidates often campaign on development platforms, promising cit- izens that they will deliver quality public goods. It is not clear, though, that the delivery of public goods is improving. To examine these problems, I investigate the case of Ghana. Devoting one year to field research, I observed the actions of political actors in 11 districts. I interviewed over 200 local elites, including politicians, bureaucrats, private business owners and traditional chiefs. I administered surveys to bureaucrats and gathered data on local development projects. Political financing and the quality of public{goods delivery are intertwined. Ghana- ian politics is financed by an \iron square" of politicians, bureaucrats, construction contractors and party officials who covertly extract funds from public procurement. Their actions reduce the funds available to build development projects, hinder the ability of citizens to monitor project quality and drive honest contractors out of the market. This system of political financing is ultimately sustained by the kinship obligations that each player must satisfy. iii Contents Abstract iii Acknowledgements x 1 Introduction 1 1.1 Research Questions . .1 1.2 Significance . .3 1.3 Context & Methods . .5 1.4 Plan of the Dissertation . 10 2 Inside Motivations 11 2.1 Introduction . 11 2.2 The Players . 18 2.2.1 The Politician . 18 2.2.2 The Bureaucrat . 24 2.2.3 The Contractor . 30 2.2.4 The Party Chair . 35 iv 2.3 Synthesis . 37 2.3.1 The Public Procurement Act . 39 2.3.2 District X Bid Opening . 43 3 A Theory of Political Finance 48 3.1 Introduction . 48 3.2 Financing Politics . 49 3.2.1 Preferences . 50 3.2.2 Actions . 56 3.2.3 Enforcement . 60 3.2.4 Continuity . 66 3.3 Reshaping Accountability . 69 3.4 Conclusion . 72 4 Empirical Findings on Procurement 74 4.1 Introduction . 74 4.2 Survey Results . 75 4.2.1 Elite Bureaucrats' Survey . 75 4.2.2 Conjoint Experiment . 79 4.3 Archival Results . 89 4.3.1 Tender Reports . 89 4.3.2 Contractor Registration . 96 4.3.3 Media Accounts . 100 4.4 Conclusion . 103 v 5 Uncertainty, Kinship and Contractors 105 5.1 Introduction . 105 5.2 Firm Investment and Kinship . 107 5.3 Suboptimal Contract Allocation . 113 5.4 Discussion . 123 5.4.1 Construction Quality . 123 5.4.2 Firm Mergers . 125 5.4.3 Party Chairs . 126 5.5 Conclusion . 127 6 Conclusion 130 Bibliography 136 Appendix A 145 Appendix B 149 vi List of Figures 1.1 Map of Ghana. .6 2.1 Sample Tender Advertisement from National Newspaper. 41 2.2 Sample Bid Evaluation Document. 45 3.1 Districts in Which DCEs Contested Parliamentary Seats, 2012. 51 3.2 A DCE Shares Projects With Bureaucrats . 58 3.3 Regional Chairs, Foot Soldiers and Politicians. 63 3.4 The Iron Square of Political Finance. 65 3.5 Subcontracting Across Party Lines. 67 4.1 Changing Wrong Practices . 78 4.2 Political Transfer of Bureaucrats . 79 4.3 Sample Bid{Opening Report from a District Tender Committee . 80 4.4 Two Sample Conjoint Evaluations . 82 4.5 Conjoint Experiment Results . 88 4.6 Contractors and Projects, Northern District. 90 4.7 Contractors and Projects, Southern District. 92 vii 4.8 Project Bidders Data, Southern District . 94 4.9 Project Bidders Data, Southern District . 95 4.10 Sample Contractor Registration Certificate . 97 4.11 Selected Data on Contractor Registrations . 98 4.12 Sample from a District 2012 Annual Progress Report . 99 4.13 Proportions of Certified and Uncertified Contractors, 2012. 100 5.1 Party Chair's Dictator Game. 117 5.2 Foot Soldier's Dictator Game. 120 viii List of Tables 2.1 District Assembly Common Fund Allocations (2012), By Region . 39 4.1 Descriptive Statistics of Bureaucrat Sample . 76 4.2 Education and Pay of Bureaucrats . 76 4.3 Conjoint Experiment Results . 87 ix Acknowledgements I am indebted to the kindness of so many. I first visited Ghana in 2008, and the warmth, hospitality and humor of the Ghanaian people have always made me feel at home. I thank Siisi Ocran and Eric Tetteh at the Ministry of Transport for their contin- ued support and hospitality. Two of the first people I met in Ghana, I count them amongst my closest friends. I am honored to have learned from them and watched their families grow. At ISSER, I have gained so much from my conversations with Isaac Osei{Akoto. I also thank my good friend Ebenezer Offei{Ansah, whom I first met in 2009. I am inspired by his tireless work ethic, and I know he will contribute so much to the betterment of the world. At the Centre for Democratic Development Ghana, I have enjoyed numerous academic discussions with Kojo Asante and E. Gyimah{Boadi. I am also grateful for the friendship and encouragement of Kakra Adu, Isaac Asare, Maxwell Ashon, and Mohammed Awal. There are many members of the Government of Ghana that have graciously do- nated their time and support. Elionai Adu{Labi has been an indefatigable source of knowledge. Alhaji Ishaq and Coffie Agama have shared so much of their on{ the{ground experiences. I thank Joseph Dasanah at the Local Government Service Secretariat for welcoming me and facilitating my research. I am also grateful to the six Cabinet Ministers who allowed me the once{in{a{lifetime research opportunity of observing them up close. I express my deepest appreciation to the hundreds of public servants I have encountered over the years. I am humbled by their compelling stories and dedication to public service. Listening to them tell their stories has been one of the most rewarding experiences of my life. This research would not have been possible without the support of Ghana's two main political parties. From the New Patriotic Party, I am immensely grateful to x the ever{patient Kwadwo Antwi Adjei. I have taken in so much about Ghanaian politics and history just by sitting in his office. From the National Democratic Congress, I thank Karl Arhin and Akuamoah Ofosu{Boateng for their support and lively conversations. I also appreciate the encouragement of many junior staffers of the NDC. Outside of research, I am indebted to many friends in Ghana for the encour- agement that sustained me during fieldwork. In particular, I thank Abednego Ma- jisi, Alhaji Massoud, Hosseini, Bruce, Randy, Clement, Martin, Mensah Armah and Thomas Akoensi. There are many I wish to thank in the United States. First, I thank Blocking Group One, the best group of friends I could ask for: Adam Hallowell, Albert Chen, Allie Fixsen, Aneesh Kulkarni, Anna Shneidman, Brian Weller, Christina Li, Emily Bruemmer, Gibran Minero, Greg Poulos, Holly May, Jacob Sanders, Jenny Hsu, Katie McCabe, Lucie Guo, Meghan Purdy, Michelle Siao, Ryan Jamiolkowski, Stella Lee, Travis May, Vera Mucaj and Xianlin Li. I express tremendous gratitude to Jonathan Phillips, Leah Rosenzweig, Mauri- cio Fernandez Duque, Matthew Stephenson, Daniel Franklin, Anna Persson, Rachel Sigman, Staffan Lindberg, Shana Warren, Seth Soderborg and colleagues at Boston University, Northwestern, Harvard, MPSA, NYU, UCLA, the International Confer- ence on Public Policy and the African Studies Association for fruitful discussions of previous versions of this work. I am grateful for the guidance of Dan Carpenter, Arthur Spirling and Lucie White in the writing of this dissertation. I have appreciated their diverse perspectives, which has better shaped my thinking. I have also benefited from the wisdom and friendship of Michael Hiscox and Jens Hainmueller, who believed in me and helped me explore interesting research questions in rural Ghana. I first met my dissertation advisor, Robert Bates, in 2006, when I was a sophomore at Harvard College. It has been an honor to learn from him. The thing I appreciate most about him is that, no matter how poorly formed or ambitious my ideas, he has never made me feel inferior. Bob has been a supportive, patient advisor, and he has always had my back. I am awed by the breadth of his knowledge, and his example has inspired me to be creative and holistic in my research. From him, I have learned the importance of fieldwork and distilling the underlying motivations of complex behavior. Michelle Storch has brought boundless happiness to my life. She has supported me during the arduous process of dissertation writing, and her love brightens my days. There is no one else I enjoy seeing the world with more, and I cannot wait to see what our future holds.
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