The Effect of Presidential Election Voting on the Budget Allocation in Iranian Provinces

In new democracies, politicians target the distribution of public spending to gain political support, and they have an incentive to manipulate the economy before elections. This study examines the effect of presidential election voting on budget allocations in Iranian provinces using the System Generalized Method of Moments in a panel data model from 2001 to 2017. The results show that the lag of budget allocation, non-oil GDP per capita, population share, GINI coefficient, length of roads per capita, dummy variable of oil-rich provinces, and dummy variable of deprived provinces have a positive and statistically significant effect. The effect of unemployment rate is negative and significant. The findings also indicate that voting for the ruling government has a positive effect on budget performance per capita in Iranian provinces. Therefore, after being elected, politicians in Iran do not ignore the needs of voters. Allocating funds to provinces without considering their needs and capacities can create an economic gap in the country. Therefore, monitoring this matter is necessary.