Investing in the roots of your political ancestors

This paper seeks to investigate the role of electoral personalism and long-run partisan loyalty on the allocation of local public goods. To this end, we exploit the discontinuity in the political landscape of Greece after a brief military junta (1967-1974) to link the parties established after 1974 with their political ancestors during the pre-dictatorial era. In particular, after 1974 Greece is a ‘new democracy’ with infant political parties that were trying to increase their political power by maintaining the networks of their (pre-junta) political ancestor parties. Consistent with expectations, empirical findings suggest that incumbents directed public investment resources to regions characterized by long-run loyalty in favor of their party. Moreover, our analysis illuminates the channel of this association by highlighting the important role of strong Members of Parliament (MPs) with ministerial positions. This result is in line with the literature suggesting that powerful MPs typically favor their home districts under an Open-List Proportional Representation (OLPR) electoral system. This is because OLPR induces intra-party competition as candidates compete over their co-partisans in order to get elected. In this political environment, powerful MPs attempt to maintain their networks of political patronage in the loyal prefectures of their affiliated party, whereas the party expropriates their electoral influence.