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Political dynasties, by limiting political competition, are thought to exacerbate corruption, poverty, and abuse of power. This paper examines the economic effects of the presence of political dynasties in Philippine cities and municipalities, taking into account possible channels in the local dynastic cycle – the framework in which politicians try to balance their goals to perform well for their constituents, to divert resources for personal gain, and to continue to be in power. Due to the lack of extensive income accounts or other economic indicators in finer geographical units (i.e., city or municipality level), we use the Defense Meteorological Satellite Program-Operational Linescan System ( DMSP-OLS ) nighttime light data as our proxy for economic activity. Using a panel of Philippine municipalities and cities, we find that, in general, the relationship of political dynasties on economic performance is weak. However, we find that a higher share of economic expenditures leads to lower economic development in municipalities where the mayor, governor, and congressman belong to the same clan. We see this as an indication of weak institutions of checks and balances in localities with dynasties.

Political Dynasties and Economic Development: Evidence using Nighttime Light in the Philippines