In many countries worldwide, campaign contribution limits are implemented to restrict money's political influence. However, their actual effectiveness remains unclear. This paper examines the effects of these limits using a regression discontinuity design (RDS) based on Colombia's municipal contribution rules. Our analysis reveals that looser limits lead to more public contracts going directly to campaign donors after elections.
Specifically:
- Data & Methods: We employed an RDS exploiting Colombian institutional contribution thresholds.
- Key Findings:
- Looser post-election contribution limits significantly increased the number of public contracts assigned to winning candidates' top donors.
- This finding suggests that relaxed limits primarily influence post-election allocation rather than pre-election outcomes or who gets elected.
These results challenge simplistic views by showing:
- Limiting donation power doesn't necessarily reduce post-election access for donors.
- Looser constraints increase donor control over public contracts, not just their political voice.
Furthermore, our findings have important implications:
- Public spending favors specific interests (donors).
- Contract performance worsens: Contracts awarded to winning candidates' backers are more likely to exceed budgeted costs. This suggests kickbacks or preferential treatment may be facilitated by looser contribution limits post-election.
Overall, this research demonstrates a clear link between relaxed campaign contribution regulations and potentially corrupt outcomes in public procurement following elections.
