element becomes particularly relevant when investments in the sector are made primarily to boost chances for reelection, without recognition of documented facts on service delivery improvement for the society at large. Moreover, the populist politician’s strong focus on reelection may even reduce his or her propensity to request the background information needed to make informed infrastructure decisions and priorities— or have the results of investment analyses biased.<sup>17</sup> Politicians who are overly focused on reelection have been suspected of accepting weak solutions for projects that will not affect their constituency.<sup>18</sup> For instance, Cadot, Roller, and Andreas (2006), using French regional data, show that infrastructure investment are often a byproduct of a politically driven game in which decisions are likely to depart from efficiency considerations.<sup>19</sup> An overly strong focus on reelection and the associated need for campaign funding may influence the ranking of investment priorities. Extending network coverage may be effective as a political propaganda, but the effect for poor voters may be limited if the policy is not supported with enough budget allocations to reach all segments of users. The regulated price for network connections can be too significant for poor consumers. There are many cases in which networks have been expanded and celebrated as a political decision while in the end consumers cannot afford to pay for access to the extended services.<sup>20</sup>

**_Market reform:_** The speed and timing of decisions on market design may change as the populist’s focus on reelection surpasses welfare-orientations. Politically unpopular layoffs are a likely short-term effect of divesting state-owned or state-controlled monopolies to competition. Political risk and reelection concerns can explain the timing to implement reform and possible delays.<sup>21</sup> Governments with weak political support are more likely to postpone needed reforms. Not only will they have difficulties building consensus; they would also be careful not to put reelection at greater risk.<sup>22</sup>

**_Mode of service provision_ :** Studies by Guasch (2004, 2008) systematically considered aspects of renegotiation in infrastructure. They found that a large percentage of government-led renegotiations happen within six months of government elections. These renegotiations and reforms tended to include user-friendly elements, such as reductions on tariffs or postponement of tariff increases.

**_Pricing and subsidies_** : While pricing and access are important redistribution policies, they can be strategically used to maximize the likelihood of reelection. Any cost reduction, whether justified or not, is an easy way of pleasing voters and for a minister in charge of a sector, an easy way of achieving continuous popular or business support for its management of the sector. What populist politicians - focused on reelection - may fail to care enough about, however, is how to balance the benefits of subsidies with their costs. In developing countries, subsidies of some form are usually needed to secure access to water, energy or transport services for large segments of users. However, it has proven difficult to factor in the costs of these subsidies into the overall financing strategy of the sector in a transparent and hence accountable way. Combined with a weakening of control mechanisms, ad hoc subsidy budgeting

> 17 While a politician may allocate resources for investment planning to signal welfare-orientation, the eventual policy decisions may deviate from the planning recommendations.

> 18 Fiva and Natvik (2009) reject the hypothesis that the returns to public capital (investments) are independent of the other policy options.

> 19 See the broader discussion in Mueller (2003). Cadot, Roller, and Andreas (2006) may not find very much impact, but this is just one of many studies supporting these assumptions. Note, however, the results by Leblanc, Snyder, and Tripathia (2002), who analyze underinvestment in public goods by majoritarian voting rule and suggest that pork barrel in projectselection, may actually avoid some inefficient outcomes. To the extent that benefits from such projects are relatively targetable, budget makers will be willing to devote more resources to these projects than they would to more generalized investments. Faced with the choice between an extremely inefficient level of general public investment and a somewhat less inefficient level of targeted investments, the latter may have a stronger welfare effect.

> 20 For some examples from Africa, see Briceño-Garmendia, Smits, and Foster (2008). For natural gas network connection, see World Bank (2010).

> 21 See Sturzenegger and Tommasi (1998) for a good summary.

> 22 Murillo and Martinez-Gallardo (2007) discuss the risk of policy reforms. Smaller electoral margins increase the risks of adopting a potential unpopular policy, as they increase the marginal value of votes. Smaller legislative margins hamper the government’s ability to adopt its desired policy and increase the cost of a legislative defeat.

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