The Moderating Effect of Politicians’ Power on the Correlation Between Total Grants and Unit Grants in Special Grants Distribution

Abstract

To investigate whether political power influences the allocation of government grants, a grants allocation panel dataset of 150 units of analysis was constructed for the period 2016-2019. Specifically, the aim of this study is to find out how politicians’ influence would work in situations where the size of the pie, the sum of the amount of grants distributed to every electorate, changes. This perspective that focuses on changes in the aggregate amount of grants, which has not been considered in previous studies, is reflected in the interaction term between the size of the resources and the measure of political power. Fixed effect estimation reports that the coefficient of the interaction term is significant with a positive sign. This implies that powerful politicians are not satisfied with merely securing more grants than the previous year. Instead, they seek to obtain more year-on-year increment in grants than other politicians. Policymaker is advised to monitor and exclude any political influence in the decision-making process of grants allocation.