Fiscal decentralisation theories posit that ‘yardstick competition’ – comparison between peers – creates political incentives to enhance public service delivery. However, little is known about how party politics shape decision-makers’ incentives to compare each other’s performance across neighbouring localities. This working paper examines how the spatial distribution of support for political parties affects public spending across local counties in Kenya by examining the spillover effects of a partisan reform that increased spending in 10 of Kenya’s 47 counties. The findings suggest that party politics may render the disciplinary effects of yardstick competition ineffective by generating incentives to benchmark performance vis-à-vis neighbours sharing the same party, rather than among neighbours under different parties.

The briefing note version of this paper can be found here. View all papers in this series here.