Fueling the party machine: Evidence from Greece during Metapolitefsi

The establishment of the Third Hellenic Republic in 1974 (Metapolitefsi) was characterized by an increased public demand for a less centralized political system. The main political parties that emerged responded by giving priority to the development of local and regional organizations and creating a wide network of grassroots movements. This led to a gradual introduction of more decentralized political institutions and a significant increase of expenses to prefectures and subsidies to municipalities. Building on two novel hand-collected datasets at the prefectural and municipal levels, our analysis provides empirical evidence of party favoritism in the spatial allocation of intergovernmental transfers during the first two decades of Metapolitefsi. We argue that governing parties diverted intergovernmental transfers towards their political strongholds and politically aligned mayors, as local authorities played the role of the focal points in the process of party building.