The Presence of a Monarch: The Causal Impact of Different Political Institutional Settings on Local Development

Most studies on the effect of the political system on economic development take a macro lens. In this thesis, I provide novel micro-level evidence on how different political systems and institutions, as shown by variations in provincial elections, can causally impact local economic development. I use a Difference-in- Discontinuity design by leveraging the unique institutional setting of the Province of Jogjakarta, which, due to a special right, was not subject to Indonesia's provincial election law in 2004. I find minimal evidence of provincial elections affecting most development proxies; however, for three outcomes—the number of public primary schools, public universities, and auxiliary community health centers—I find significant and sizable positive effects of the provincial election. Using Heterogeneous Treatment Effect (HTE) analysis, I show that local elite capture may alter the overall treatment effect. I also show that the decentralization design, which emphasizes district government, limits the effect of provincial elections.