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The Impact of Remittances on the Endurance of Nondemocratic Regimes (Mark Mazureanu)

In this post I will investigate the impact of remittances on the endurance of non-democratic regimes and the survival of autocratic elites. I will look in particular on whether remittances can influence the prospects of democratization in states with transitory political systems. For this purpose I will brush through the literature that assesses the prospects of the incumbent elites’ to preserve power in remittance-receiving societies using the political patronage resource.

Before analyzing the impact of economic remittances let us explain in few words what is political patronage. The main assumption of the patronage theory is that nondemocratic elites cannot solely rely on undisguised force to stay in power since this type of governance is extremely costly to be maintained. That is why the majority of nondemocratic regimes prefer to preserve elements of procedural democracy that help them legitimize their rule. Organized elections are less competitive since a large part of the population is dependent on the elites. They maintain with the elites an established patronage and clientelist relation. To maintain these “preferential” relationships, elites buy allegiance from their direct supporters by offering them access to different spoils of power. In the same time, elites provide access to public goods for those who passively accept their mastership.

Three essential elements are considered in this analysis of the effects of remittances on the endurance of nondemocratic regimes. First, the power of nondemocratic regimes is contingent upon the size of their supporting coalition (Bueno de Mesquita et al., 2003). Second element is the size of the assembly from which privileged supporters are selected (Geddes, 1999). Last one is the size of power elites’ opponents. This latter element is important since the consent of power opponents represents the cost elites should pay in forms of policy concessions and access to public goods in order to stay in power (Gandhi, 2008). Remittances, in this state of affairs, change actors’ preferences by revising their individual bargaining power. Finally, the influx of remittances changes economic and political preferences of the different domestic groups. This change transforms the popular levied support previously conveyed to power elites. A good illustration is the Escriba-Folch (2013) analysis of 137 autocracies in 91 countries in the period of 1975-2009 who finds that remittances destabilize autocratic regimes by reducing citizens’ dependence on government spoils. Consequently, he concludes that remittances undermine the survival of autocratic elites. By increasing the levels of private revenues spent mainly on consumption, remittances lower the perceived value of state-provided public goods and services. By offering individuals and households an exit option from the regime’s patronage network, remittances hence break the existing clientelist link between voters and incumbent elites.

This conclusion is however conditional upon a set of conditions. First, power elites should hold multiparty elections regularly. Elections as a method of legitimation are very frequent in autocracies (Hyde & Marinov, 2012; Gandhi & Lust-Okar, 2009). Second, the political system should be organized in such a manner to governed by a dominant political party. According to Geddes, (2003) party-based autocratic regimes were the most commonly met forms of autocracies in the last six decades. That is because dominant party regimes are inclined to have larger support coalitions than other regime types. In this case, power elites rely on broad-based distribution of goods to obtain allegiance from large winning coalitions by deterring the general public from investing in the opposition. That is why the survival of these types of regimes depends not only on the elites’ capacity to provide their direct supporters with goods and services – patronage (Gandhi, 2008), but also on the delivery of public goods to larger segments of the population – clientelism (Bueno de Mesquita et al., 2003; Malesky et al., 2011; Magaloni, 2006; Greene, 2007; Pepinsky, 2007).

To explain the working mechanism under these first two conditions, Greene (2010) clarifies that clientelist systems with a dominant party can be established only through politicization of public resources/public services. The party control over state assets opens the possibility for the elites to control and distribute the access to housing, social services, property, agricultural allowances, subsidies and pensions, education, transportation cost, fuel supply, access to jobs or prices of food. Incumbents in this manner secure their positions as public services become accessible only in exchange for regime support. This politicization of public services makes large portions of society be economically dependent on the services provided by the incumbent elites (Magaloni & Kricheli, 2010). For instance, public housing programs promoted by the ruling People's Action Party in Singapore represented a key source of support and votes for the party since 1960. The most common forms of hooking allegiance were to distribute different types of goods or money in the pre-electoral period. For instance, during elections in Malaysia, the ruling party staff visited rural households to distribute cash payments to supporters (Pepinsky, 2007, p. 144). During presidential elections in Romania in 2014 the ruling party distributed wristwatches and clothes. The Communist Party in Moldova distributed in 2004 and 2008 elections potatoes, rice, pasta and sugar. In Ukraine and Moldova the parties also offered theatre, circus and concert tickets for free, not to mention that an outstanding practice is to invite pop-stars to perform during electoral shows in support of the incumbent party. A more recent development of political clientilistic relationship in Moldova is to buy people elegance by offering the poor part of the electorate Christmas gifts coming from incumbent elites personal foundations. For instance the president’ wife runs “From Soul” foundation and the leader of Democrat Party – the “Edelweiss” foundation.

The incumbent can also use coercive methods. Blaydes (2010) shows that during Mubarak's rule in Egypt, areas that opposed the ruling party saw almost no development in sewerage and water providing infrastructure between 1980s and 1990s. A rule of thumb was established since independence in Ukraine: the elected president and his party would represent only the Eastern or Western part of Ukraine thus neglecting almost entirely the development of the other region from which he would have little support. Moreover, under PRI rule in Mexico, PRONASOL funds, consisting of public works where deployed in those municipalities, which managed to ensure the voters’ loyalty (Magaloni, 2006). In Moldova the same can be observed regarding borrowed funds distribution. For instance the FISM (The Fund for Social Investment from Moldova) whose budget is predominantly made out of foreign grants is in charge to implement major infrastructural projects in Moldova. Upon analysis it is seen that the benefiting communities are exactly those whose mayors are members of the party that dominates the political landscape.

The third condition described by Green refers to remittances. He claims that them must increase the household consumption to replace the amount and quality of public services provided by the regime (Fajnzylber & Lopez 2007; Chami et al., 2008). Adida and Girod (2010), for instance, show that remittances in Mexico were extensively used to replace the previously provided public services, such as sanitation and clean water. Chaudhry (1989) presents a similar situation in Yemen where during the 1970s, local cooperatives used the remittances they received from abroad to finance road reconstruction, schools and clinics constructions, as well as develop farming projects. In Moldova remittances are massively used to access private medical service by bypassing the public health sector that is offered only to preferential groups. Remittances hence provide households with an exit from the regime's patronage network (Ahmed, 2011; Diaz-Cayeros et al., 2003; Pfutze, 2014).

Fourth, to be able to exit the patronage trap, the voters should not care exclusively about material benefits. They need also to have ideological preferences. It is true that ideology is pushed aside when deprivation level is unbearable. That is why the poorer the voters the easier they can be trapped into clientelist regimes. Assuming that the provision of public services is the price the regime pays for buying support in clientelist regimes, the higher the state of general social deprivation, the lower the price elites must pay for this support. Consequently, with increased household revenue received from remittances, voters pursue first their ideological preferences (Merino, 2005). The theory is supported by empirical studies carried out in a number of municipalities in Mexico (Diaz-Cayeros et al., 2003; Pfutze, 2014) where remittances from migration have proved to empower non-incumbent parties. Ahmed (2011) confirms that these results are valid for the majority of Latin American countries. The last condition identified by Escriba-Folch (2013) is for power elites to have limited resources to pay for voters’ allegiance. In this sense, the available resources to be used for subsidized public services should not overbid the transfers coming from emigrants.

The main argument refuting the patronage explanation of the beneficial role of remittances is that domestic elites can also control or influence the flux of remittances entering the country. Oftentimes they can use the remittances flows to those directions that would empower their own positions. Some studies show how policymakers managed to compile specific politico-economic projects to channel the flow of remittances and to manage how these are being used (Spector & de Graauw, 2006; Meseguer & Aparicio, 2012). Meseguer and Aparicio (2012) investigated government projects in Mexico that were meant to match 3-to-1 the amount or ‘remidollars’ sent by Mexican emigrants through the existing hometown associations. A similar project in Moldova called “Pare” is run by BRD (Government Bureau in charge for the Relationship with Diaspora) that channels the emigrant’s money into the local investment projects. The study shows that, in case of Mexico, the matching of government support for public infrastructure projects was granted predominantly to municipalities that supported the incumbents. The municipalities that experienced higher political competition received less support. This is just one of the ways how governments can repay incumbent supporting communities and penalize those that support opposition candidates.

This post analyzes to what extent can economic remittances received from abroad can autonomies the local population political chose, and spoil the allegiance type of relationship built by the incumbent autocratic elites.

No conclusion…

Bibliography will be uploaded it by request.

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