Introduction Universal fertilizer subsidies common in post- - PDF document

4/11/13 ¡ Fe Fert rtil iliz izer su r subsidie bsidies & v s & votin ing be behavio ior: r: Political economy dimensions of input subsidy programs Nicole M. Mason (MSU/IAPRI), T.S. Jayne (MSU), & Nicolas van de Walle (Cornell) Presentation at the Department of Agricultural, Food, & Resource Economics Michigan State University I NDABA A GRICULTURAL P OLICY R ESEARCH I NSTITUTE 11 April 2013 Introduction § Universal fertilizer subsidies common in post- independence SSA ( dictatorships or one party rule ) § Scaled back/eliminated in 1980s/1990s § Today: targeted subsidies ( multi-party democracy ) § 7 countries, US$2 billion in 2012 (Ricker-Gilbert et al., 2013) § Stated objectives: § Increase access to inputs, productivity, & production § Raise incomes, improve food security § Other objectives: § “Do something” for rural poor (Jayne et al., 2010) § (Re-) Election: garner and maintain rural votes 1 ¡

4/11/13 ¡ “But there is no doubt that this Farmer Input Support Programme, which is supposed to be an economic activity, has sadly been abused or mismanaged by politicians and those seeking patronage and turned into a political tool for their election campaigns … And in this election year things will be worse – it will be nothing but a campaign tool; fertiliser bought with taxpayers’ money will be exchanged for votes.” –Editorial, The Post , Zambia, March 13, 2011 Some evidence of input subsidy program – elections/voting links I. Past election outcomes  subsidized input targeting? § Tanzania : HHs w/ elected officials more likely to get input subsidy voucher (Pan & Christiaensen, 2012) § Ghana : fertilizer vouchers targeted to opposition strongholds (Banful, 2011) § Malawi, Zambia : subsidized fertilizer targeted to supporters (Mason & Ricker-Gilbert, 2013) ¨ Political economy not focus (election outcomes used as IVs) II. Targeted input subsidies  election outcomes? § Qualitative: input subsidies instrumental in Mutharika’s 2009 landslide victory in Malawi (Chinsinga, 2012; Mpesi & Muriaas, 2012) § Little (no?) quantitative empirical evidence to date : Do targeted input subsidies win votes ceteris paribus? 2 ¡

4/11/13 ¡ Election Subsidized Objectives Zambia outcomes fertilizer I. Effects of election outcomes on HH-level subsidized fertilizer targeting a. Swing voters, base, and/or opposition? b. Presidential vs. parliamentary election results? II. Effects of targeted fertilizer subsidies on presidential election outcomes (share of votes won by incumbent) a. Do fertilizer subsidies win votes? b. If yes, to what extent? If not, what does? III. Link to poli. sci. debates, evidence IV. Policy implications Contributions 1. Past election effects on subsidized fertilizer targeting § Panel data à control for unobserved heterogeneity (c.f. Banful, 2011) § More detailed examination – Zambia (c.f. Mason & Ricker- Gilbert, 2013) 2. Ceteris paribus effects of fertilizer subsidies on voting patterns (incumbent’s vote share) 3. Fractional response w/ CRE & control function 4. Inform political science debates § Which voters do states target w/ clientelistic strategies? Electoral effectiveness of targeted state expenditures? § 3 ¡

4/11/13 ¡ Outline § Zambia background § Fertilizer subsidies and elections in Zambia § Part I: Election outcomes è subsidized fertilizer? § Part II: Subsidized fertilizer è election outcomes? § Conclusions & policy implications § Research interests Zambia Indicator Year Size > Texas Sources: Population 14.2 mil 2013 CSO (2011), CIA (2013) % Rural 64% 2010 Agric. % of labor force 85% 2004 GDP/capita (PPP) $1,700 2012 Poverty rate: 61% 2010 Rural 78% Urban 28% Maize • 84% of smallholders grow it; 60% of nat’l calorie consumption • >85% of government ag spending = maize incentives (fertilizer subsidy, Food Reserve Agency (FRA)) 4 ¡

4/11/13 ¡ Elections & major political parties § First multi-party elections in 1991 § Presidential & parliamentary elections every 5 years Movement for Multi-Party Democracy (MMD) Ruling party 1991-2011 Patriotic Front (PF) Defeated MMD in 2011 Fertilizer subsidies & timing of elections MMD PF 200,000 180,000 Nov. 1996: Chiluba 160,000 à FCP Dec. 2001 & Sep. 2006: Sep. (200-800 Mwanawasa 2011: 140,000 MT of fertilizer kg) à FSP (cash, 400 kg) Sata 120,000 100,000 80,000 Oct. 2008: 60,000 Banda à 40,000 FISP 2009 (200 kg). 20,000 Expands. 0 Source: MAL (2012) 5 ¡

4/11/13 ¡ Part II: Effects of fertilizer subsidies on district-level share of votes won by the incumbent Part I: Effects of past election outcomes on HH-level subsidized fertilizer targeting Source: STR / Reuters Part I: Effects of past election outcomes on HH-level subsidized fertilizer targeting Conceptual framework § GRZ subsidy targeting criteria vague § Capacity to cultivate 1-5 ha of maize § Ability to pay farmer share of input costs (40-50%) § Cooperative membership § Theories of redistributive politics § “Core supporter”/turnout model (Cox & McCubbin, 1986) § “Swing voter” model (Lindbeck & Weibull, 1993; Dixit & Londregan, 1996, 1998) §  Reduced form model of GRZ behavior § Kg of subsidized fertilizer allocated to HH function of farmer/ HH characteristics, election outcomes, other factors 6 ¡

4/11/13 ¡ Part I: Effects of past election outcomes on HH-level subsidized fertilizer targeting Empirical model: Unobserved effects Tobit § Corner solution (11% receive), qty differs, panel data govtfert it = max( 0 , α + elect kt β + z it δ + θ w it + γ p it − 1 + c 1i + e 1t + u 1it ) 2 ) D ( u 1it | elect kt , z it , w it , p it − 1 , c 1i , e 1t ) = Normal ( 0 , σ u 1 § govtfert : kg of subsidized fertilizer allocated to HH § i = 1, … ,4285, t = 1999/2000, 2002/03, 2006/07 § elect : past election outcomes (Banful, 2011) § (a) =1 if ruling party (MMD) won constituency § (b) | Percentage point spread MMD – lead opposition | § (a) × (b) Part I: Effects of past election outcomes on HH-level subsidized fertilizer targeting Empirical model (cont’d) govtfert it = max( 0 , α + elect kt β + z it δ + θ w it + γ p it − 1 + c 1i + e 1t + u 1it ) 2 ) D ( u 1it | elect kt , z it , w it , p it − 1 , c 1i , e 1t ) = Normal ( 0 , σ u 1 § z : HH, community, region characteristics – targeting § Landholding, assets (farm equipment, livestock) § Age, education, sex of HH head; HH members by age group § Agro-ecological conditions; distances to nearest town, roads § w: market price of fertilizer p it-1 : maize price § c 1i : unobserved heterogeneity e 1t : year effects § u 1it : idiosyncratic error 7 ¡

4/11/13 ¡ Part I: Effects of past election outcomes on HH-level subsidized fertilizer targeting Estimation strategy § Correlated random effects (CRE) Tobit § Not concerned about endogeneity of elect § Constituency level: outcome of 10,000s of votes (150 const.) § Part II: No feedback ( govtfert à elect ) Data § 3-wave HH-level panel, nationally rep. (12,855 obs.) § Election results: Electoral Commission of Zambia Part I: Results Dep. variable: kg of subsidized fertilizer to HH Key explanatory variables APE Sig. p-value (a) MMD won (=1) 23.21 *** 0.00 (b) | PP spread MMD – lead opp. | -0.09 0.30 Interaction effect: (a) × (b) 0.54 *** 0.00 Note: *** p<0.01, **p<0.05, *p<0.10. APE = average partial effect. Interaction effect example • Compare predicted govtfert at 75 th (59.1 pp) vs. 25 th (18.9 pp) percentile of MMD margin of victory in 2006 • 33.1 kg difference MMD wins APE slightly smaller if use parliamentary (18.7 kg) 8 ¡

4/11/13 ¡ Part I: Effects of past election outcomes on HH-level subsidized fertilizer targeting Discussion § Zambia : MMD rewards its base § Similar to Malawi findings (Mason & Ricker-Gilbert, 2013) § Consistent w/ “core supporter/turnout” model § Ghana : opposition strongholds targeted (Banful, 2011) § No evidence to date for “swing voter” model for subsidized fertilizer Part II: Effects of fertilizer subsidies on district-level share of votes won by the incumbent Source: STR / Reuters Do fertilizer subsides win votes in Zambia? No! But reducing poverty, inequality, & unemployment does. 9 ¡