Public Finance in Kenya

• In Event: Emerging Trends in the Study of Bureaucracy in the Developing World

Abstract

What explains governments’ budgeting preferences for some types of local public goods over others? While many have examined facets of this question by examining the characteristics of the goods that different agencies provide – such as their excludability vis-a-vis the local homogeneity of the community, or their potential to ensnare recipients into clientelistic relationships of dependence – we shift focus to examining the characteristics of the managerial bureaucrats who actually run the budgeting process, and thus allocate funds to certain local agencies over others. We argue that managerial bureaucrats build specialties for the budgeting and creation of certain types of local public goods over others throughout their careers. We examine facets of the theory by collecting the universe of budget allocations, disaggregated by department (e.g., education, water, sanitation) across Kenya’s 175 local governments over a period of almost 10 years. Budgeting decisions are made collectively by locally appointed councillors alongside a centrally-appointed “clerk”, a managerial bureaucrat who is rotated across local governments across time. We leverage the fact that 37% of local government-years are in-between clerks to isolate the revealed budgeting preferences of the council, as well as a fixed-effects model to estimate each clerk's budgeting preferences. Overall, we find that clerks tend to specialize in certain goods over others, even accounting for the preferences and needs of each individual locality. Our results add to recent literature that recognizes the preferences and skill of managerial bureaucrats in affecting important public sector outcomes.

Authors

• Stuart Russell, Massachusetts Institute of Technology

• Horacio Larreguy, ITAM

• Mai Omer Hassan, MIT