The Local Economic Effects of Morales’ Legacy in Bolivia

• In Event: Poster Session: Political Economy

Abstract

Left-wing governments are often affiliated with income redistribution through higher taxes, social spending and public service delivery. In practice, the role of government partisanship and ideology, in shaping economic and social policies, is contested.

This study uses the case of Bolivia to analyze the impact of left-wing mayors on local development in recent municipal elections. The analysis focuses on mayors representing Movimiento al Socialismo (MAS), Evo Morales’ party that governed the country since 2006 until his recent resignation. Criticism of his integrity and questions of anti-democratic practices overshadow positive developments in the country. Over the course of Morales’ presidency extreme poverty and inequality have decreased, but little is known about how MAS’ inclusive policies contributed to these developments in the country.

The analysis uses a close election regression-discontinuity design to study the effect of MAS mayors on public spending and overall decreasing poverty and inequality. The close election design exploits the winning margin of the MAS party as the treatment and studies its effect on local economic and social outcomes. The analysis covers the last three municipal elections and subsequent governing years, ranging from 2004 to 2019, using census data, public spending allocation, household surveys and satellite imagery. The analysis relies on satellite night time imagery to measure yearly economic growth and other satellite imagery to track infrastructure improvements and changes in agriculture and coca plantation.

The paper contributes to the literature on redistribution by local governments and its effects on local poverty and inequality reduction in developing countries.

Author

• Sina Smid, Copenhagen Business School