Development Aid, Institutional Change, and Local Democracy: Investigating the Role and Impact of Elected Councils in Rural Indonesia

Abstract

I investigate the consequences of recent attempts by multilateral and international development agencies to foster democracy at the local level across the developing world. Specifically, I examine how the creation of elected councils under the active support of development agencies shapes the character of local democratic governance. I advance a theory of how the creation of these councils influences the distribution of political power, the political participation of local residents, and the political inclusion of disadvantaged groups, and I evaluate the impact of these councils in rural Indonesia. Based on a natural experiment that analyzes an original survey data set and in-depth interviews and discussions with village residents, I uncover an unexpected set of findings. I find that the creation of an elected council strengthens the political role and influence of poor, ethnic majorities within villages who are predominantly men, but it does so at the expense of minorities, women, and the rich. The evidence suggests that international efforts to foster local democracy end up fostering an exclusive form of democracy that lays the groundwork for a local form of populism.