Can vouchers reduce elite capture of local development projects? Experimental evidence from the Solomon Islands

Abstract

External financing of local public goods can potentially create 'political resource curses' by reducing citizen oversight, exacerbating elite capture, and producing policy outcomes that are sub-optimal for the general population. This paper experimentally tests a novel mechanism that seeks to mitigate elite capture of local development projects. Control communities are provided with block grants to fund local public goods, while households in treatment communities are provided with vouchers that they may either contribute to a public good or redeem at a discount for a private capital good. We find that the use of vouchers as a mechanism for aid delivery increases community participation in local public decision-making, changes the nature of allocation outcomes, and improves community satisfaction with allocation outcomes.