This is a guest post by Lucas González, researcher at the National Council for Scientific and Technical Research (CONICET) and professor at the Universidad Católica Argentina (UCA) and Universidad Nacional de San Martín (UNSAM) in Buenos Aires, Argentina
In the last decade, federal expenditures in public housing, sanitation, roads, and urban works rose by 108% in Brazil and 429% in Argentina, becoming one of the most important redistributive tools in the hands of the federal government. Those funds represented almost 8% of the total budget in Argentina and 3% of the total Brazilian budget. Investment in public infrastructure has a highly redistributive impact and constitutes a budget item over which the federal government has large discretion. Redistributive funds are those that can generate potentially large economic and social externalities in the localities or regions where they are invested. The regional distribution of infrastructure funds is a mechanism through which money can be redistributed from the regions that pay taxes that finance these funds to others in which the investment is actually made.
In a recent paper (Gonzalez and Mamone 2015), we studied the main factors that affect distributive politics in Argentina and Brazil, two highly unequal presidential federations in Latin America and where redistribution has historically been a sensitive and politically divisive issue. Using original data on federal infrastructure spending for the 24 provinces in Argentina and the 27 states in Brazil for the period 1999-2011, we asked what is the role of presidents and governors when it comes to allocating federal monies to subnational units in developing federal democracies.
Although most researchers recognize a crucial role to presidents, legislators, and state politicians, we are limited in our understanding of the factors that shape distribution. Existing scholarship studies the federal resource allocation across regions by focusing almost exclusively on the role of congress and its internal operations, such as committee composition and partisan configuration. However, more recently, some studies have begun to explore the influence presidents have over the allocation of federal outlays (Larcinese et al., 2006; Berry et al., 2010). But there is little agreement on how presidents influence the distribution of federal outlays. Some argue presidents influence the budgetary process by following electoral expectations: they allocate more funds in districts were they expect larger electoral benefits and returns (Dixit and Londregan 1996). In contrast, Cox and McCubbins (1986) argue that the optimal strategy for risk-averse candidates is to distribute to their reelection constituency and over-invest in their closest supporters to maintain existing political coalitions.
In Latin America, most presidential systems put large powers and responsibilities in the hands of presidents. Presidents in Latin America can introduce bills, veto laws, legislate by decree during emergencies, and have preeminence in the making of annual budgets. As a result, presidents have been endowed with larger legislative powers to get their policy agenda passed and this has helped the executive to win greater leverage vis-à-vis the legislature over time. We therefore claim that presidents prefer to invest in districts where their party is strongest, not to shore up swing areas, and certainly not to waste money where the party does not have a chance. Although this argument stresses the relevance of partisan links, it does not identify which partisan links are relevant to explain distributive outcomes: it may be those between presidents and federal legislators, national and regional party leaders, federal ministers or high-ranking federal officials and state politicians, or between presidents and governors.
Our empirical findings indicate there is large variation between Argentina and Brazil in the relevance of the partisan links between presidents and governors, and the influence of congress and its committees. Ceteris paribus, allied sub-national units in Argentina and Brazil received substantially more funds than opposition districts. Provinces and states are also more likely to get more funds if they are electorally secure and not swing districts, when controlling for third variables. They get more funds when the difference between the share of votes of the governor and the main party in the opposition is larger. Presidents favor more secure provinces controlled by allied governors in Argentina. Due to the closed-list proportional representation electoral system, governors are decisive in defining the list of candidates for their party tickets, so they exercise a decisive influence over provincial delegations in the federal congress
In contrast, the interaction term between the swing and allied variables for the Brazilian sample is statistically insignificant and moves in the opposite direction than expected. Scholars claim that governors are indeed influential (especially before 1994) due to the centrifugal configuration of Brazilian federal institutions, electoral laws such as the open-list proportional representation system (which weakens party leadership and promotes fragmentation and regionalization of the party system), the decentralized organization of national parties, the powers governors have over policymaking, their control of resources for patronage and pork, and the influence governors have over career prospects for federal legislators. However others contend that governors’ influence has been increasingly weakening since the 1988 and 1994 constitutional reforms: from the legislative powers of the president and the centralized legislative organization in congress, to structural factors such as pro-poor growth that favored the Left at the national level and eroded conservative parties’ support at the local level. In our results for the Brazilian case, the coefficients for allied and secure districts move as expected. Allied and secure states tend to receive more funds, signaling that presidents compensate secure districts, irrespective of them being in the core of the presidential coalition.
Our results also indicate that infrastructure distribution in Argentina is mainly decided by the national and provincial executives and not the federal legislature. Congressional committees do not affect the outcome, but congressional delegations do matter in Brazil. Individual and collective amendments are the key negotiating tool between presidents and legislators and a mechanism through which the president crafts legislative support in exchange for pork in both chambers of congress. Furthermore, we observe that elections are not relevant in explaining distribution in either of the two cases and that presidents are mostly motivated by political considerations.
How can we explain the differences between Argentina and Brazil? Why are governors more relevant in Argentina and congressional delegations more influential in Brazil? We can only risk some hypotheses that need to be further developed and analyzed systematically. In Argentina, governors have a large influence over the formation of legislative party lists and exercise a decisive influence over provincial delegations in the federal congress. Consequently, presidents need to negotiate legislative support with governors, especially those in their coalition. Moreover, presidents depend on governors as they are more effective in mobilizing the electorate and building up federal electoral support than national party delegates. As a result, some regions of the country may receive federal funds not only from their congressional representatives doing constituency service. Presidents may also compensate governors for their territorial political support and their capacity to deliver votes and seats. In relation to the differences in the relevance of congress, one possible answer could point out to the degree of concentration of political power in the hands of the president and the need to build up legislative coalitions. When presidents get enough political support from their own parties (in terms of seats and discipline) to pass crucial legislation in congress, they may have fewer incentives to form broad legislative coalitions. Under those circumstances, presidents would be more likely to concentrate decisions on how to distribute and to force cooperation from the legislature. On the contrary, when presidents do not get enough political support from their own parties and need to build up legislative coalitions with other parties, congress will be more likely to play a more relevant role. After all, this is the crucial arena for inter-party bargaining. Presidents in Argentina have received 2.5 times more support in congress from their own parties in the period under study than in Brazil (42.4 percent versus 17.2 percent).
We also found that programmatic factors, such as equity and efficiency criteria, play a secondary role in distributive politics, especially in Argentina. Most of the efficiency criteria are not relevant factors to explain the allocation of infrastructure funds in the two cases. Only urbanization rate moves as expected and receives empirical support in Brazil. In Argentina, the statistically significant criteria move in the opposite direction than expected: more industrialized provinces receive less federal infrastructure funds. In Brazil, states with a larger share of poor people receive fewer funds but so do richer states in terms of per capita GDP. Combined results for poverty and income in Brazil seem to indicate that more overrepresented, less populated, middle and lower income states with fewer average poor households received more public works. Northern and Midwest states are the ones that resemble those structural characteristics. Why does Brazil seem to be more programmatic than Argentina? Why does Argentina not seem to clearly follow equity or efficiency criteria in the distribution of federal infrastructure spending? Possible clues could point to some usual suspects: institutions, parties, or the bureaucracy. It may well be that the president has formal rules that allow him/her more discretion in Argentina than in Brazil. In Argentina, the president has legal authority to reallocate budget transfers. This discretion has been used to form and sustain crucial territorial governing coalitions, to some extent crafted through the distribution of public infrastructure spending. The question would be, then, why does Argentina have these rules and not Brazil? It may also well be that Brazil has more programmatic parties in government (the Workers Party) than Argentina (the Justicialista Party, which is more ideologically heterogeneous and more fragmented territorially), and this obviously influences programmatic decisions in government. Or we can also point to the state and its bureaucracy, and claim that merit-based bureaucratic planning offices in Brazil have more say and influence over presidential decisions than in Argentina.
Berry, Christopher, Barry Burden, and William Howell. 2010. The President and the Distribution of FederalSpending, American Political Science Review (104)
Cox, Gary, and Mathew McCubbins. 1986. Electoral Politics as a Redistributive Game, The Journal of Politics (48)
Dixit, Avinash and John Londregan. 1996. The Determinants of Success of Special Interests in Redistributive Politics, The Journal of Politics (58)
González, Lucas and Ignacio Mamone. 2015. Who Distributes? Presidents, Congress, Governors, and the Politics of Distribution in Argentina and Brazil, Revista Ibero-Americana de Estudos Legislativos (4)
Larcinese, Valentino, Leonzio Rizzo, and Cecilia Testa. 2006. Allocating the U.S. Federal Budget to the States: The Impact of the President, The Journal of Politics (68)
Lucas González holds a PhD in political science at the University of Notre Dame. He is researcher at the Na- tional Council for Scientific and Technical Research (CONICET) and professor at the Universidad Católica Ar- gentina (UCA) and Universidad Nacional de San Martín (UNSAM) in Buenos Aires, Argentina. He is currently a postdoctoral visiting fellow at the Center for Latin American and Caribbean Studies, Watson Institute, Brown University. He has coauthored two books and written articles, the last ones published in The Journal of Po- litics, Latin American Research Review, Latin American Politics and Society, Publius: The Journal of Federa- lism, América Latina Hoy (Spain), Revista de Ciencia Política (Chile), and Desarrollo Económico: Revista de Ciencias Sociales (Argentina). Email: email@example.com.
Miguel Ignacio Mamone is PhD student in political science at the Universidad Torcuato Di Tella and an Assis- tant Professor at the Faculty of Social Sciences, Universidad Catolica Argentina. He holds a doctoral scho- larship at the National Council of Scientific and Technical Research (CONICET) of Argentina. He specializes in Latin American politics, federalism, public spending, and redistribution.