Ulric B. and Evelyn L. Bray Seminar in Political Economy

Using a randomized field experiment we look at the effect of the creation of democratically elected councils in rural Afghanistan on local governance quality, as measured by the outcomes of a food aid distribution. The results indicate that when democratic councils, rather than traditional leaders, manage the distribution the food aid targeting is improved and the level of embezzlement is not changed. However, in villages in which a council was created, but the responsibility for managing the aid distribution was not explicitly assigned to it, targeting was not improved and embezzlement increased. Requiring female participation in the distribution also increased embezzlement and did not improve targeting. Overall, the results indicate that the creation of democratic institutions can improve governance, but only if institutional responsibilities are clearly defined. If democratic institutions are created in parallel with traditional ones without clear division of responsibilities, this may lead to an increase in corruption.