Political Institutions and Local Public Goods: Evidence from a Field Experiment in Indonesia by Benjamin A. Olken :: NEUDC 2007 Papers :: Northeast Universities Development Consortium Conference :: Center for International Development at Harvard Universi

Decentralization throughout the developing world raises questions about how local political processes affect the provision of local public goods. To investigate this, I conducted a randomized field experiment in 48 Indonesian villages that were each in the process of applying for village infrastructure funds. Villages were randomly assigned one of two political mechanisms for choosing projects, either a representative meeting-based mechanism or a direct election-based mechanism. I find that the election-based mechanism resulted in dramatically higher satisfaction, increased knowledge about the project chosen, greater perceived benefits from the project, and higher reported willingness among villagers to contribute supplementary funds and labor to the project. The political mechanisms used had much smaller effects on the actual types and locations of project chosen, with some evidence that direct elections resulted in projects located in poorer, but less isolated, areas of villages. The results show that direct participation in political decision making can substantially increase legitimacy, even if it has relatively little effect on the ultimate decisions taken. * I thank Esther Duflo, Amy Finkelstein, Michael Kremer, and Katerina Linos for helpful comments. Melissa Dell provided exceptional research assistance. Special thanks are due to Susan Wong and Scott Guggenheim for their support and assistance throughout the project. The field work and engineering survey would have been impossible without the dedication of Suroso Yoso Oetomo and the SSK-PPK field staff. This project was supported by a grant from the Indonesian Decentralization Support Facility, with support from DfID and the World Bank. All views expressed are those of the author, and do not necessarily reflect the opinions of DSF, DfID or the World Bank. Email: [email protected]