Old Problems in the New Solutions? Politically Motivated Allocation of Program Benefits and the "New" Fertilizer Subsidies

Fertilizer subsidies have been reinstituted in many African countries with innovations seeking to avoid the downsides of past programs. The new subsidy paradigm however does not address how to curtail political manipulation which exacerbated inefficiencies of previous programs. This paper analyzes whether politics affected voucher allocations in Ghana's 2008 fertilizer subsidy program. We find that more vouchers were targeted to districts that the ruling party had lost in the previous presidential elections and more so in districts that had been lost by a higher percentage margin. This evidence shows that a significant threat to the efficiency of fertilizer subsidies remains. (C) 2010 Elsevier Ltd. All rights reserved.