The Political Economy of Attracting Public Funds: The Case of Lebanon - Economic Research Forum (ERF)

The Political Economy of Attracting Public Funds: The Case of Lebanon

Nisreen Salti and Jad Chaaban

September, 2010


23 pages

Economic Research Forum (ERF)

E. Macroeconomics and Monetary Economics

Using a new exceptional dataset on 80 poverty pockets in Lebanon in 2004, we propose to test the confessional and political channels of influence through which these pockets are potentially able to attract development assistance. Lebanon constitutes a perfect case study for the interaction of identity-based polarization and fractionalization (based on confession) and poverty in the context of a developing country. We investigate the effect on the level of development assistance funds transferred to municipal governments of polarization, fractionalization and sectarian distance at the level of the poverty pockets and find robust results indicating that polarization and fractionalization are significant determinants of a pocket’s ability to attract funding. We also find that one of our measures of sectarian distance, the share in the larger district of a poverty pocket’s largest sect, also generates more revenue for the pocket. Pockets with a mix of sects have greater ease in attracting funds, which is consistent with the prerogative of confessional balance in government policy dictated by the power-sharing game in the post-war era. The results are robust to the inclusion of a wide variety of controls. They put into question the design of effective channels to allocate development funds in polarized societies.

Arabic Abstract:

باستخدام مجموعة بيانات استثنائية في 80 زقاق فقير في لبنان عام 2004، نقترح ان نقوم باختبار القنوات الطائفية والسياسية ذات التأثير والتي تستطيع هذه الأزقّة عن طريقها اجتذاب المساعدات الإنمائية. تمثل لبنان حالة مثالية لدراسة تفاعل الاستقطاب القائم على الهوية (المبني على الطائفة) والفقر في سياق دول نامية. ندرس تأثير الاستقطاب، على مستوى الزقاق الفقير، ونجد أن قدرة الزقاق على اجتذاب الأموال الإنمائية تثبت إيجابيتها باستمرار. نجد أيضا أن واحدا من القياسات المستخدمة لدينا وهو حصة الفقر لأكبر زقاق لأكبر طائفة يولد أيضا المزيد من العائدات للزقاق. الأزقة ذات الطوائف المتعددة لديها سهولة أكبر في اجتذاب الأموال ، وهو ما يتسق مع حق التوازن الطائفي في سياسة الحكومة والتي تمليها لعبة تقاسم السلطة في حقبة ما بعد الحرب. والنتائج التي تم الوصول إليها قوية بالنسبة لمجموعة متنوعة من تقنيات التقدير والمواصفات.
Research Fellows

Nisreen Salti

Associate Professor, Department of Economics, American University of Beirut

Research Fellows

Jad Chaaban

Associate Professor of Economics, American University of Beirut



There are no Events PAST

Related Publications

Working Papers

Are politically connected firms turtles or gazelles? Evidence from the Egyptian uprising

Hany Abdel-Latif and Hassan Aly

Using an original firm-level database and utilizing the incidence of the Egyptian uprising of 2011, ... read more

Working Papers

Unemployment and Violent Extremism: Evidence from Daesh Foreign Recruits

Mohamed Abdel Jelil, Kartika Bhatia, Anne Brockmeyer, Quy-Toan Do and Cl´ement Joubert

Transnational terrorist organizations such as the Islamic State (also known as Daesh) have shown an ... read more