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The present paper investigates the possibility of political economy incentives behind
the allocation of the markedly expanded fiscal account of intergovernmental transfers to
prefectures and municipalities during Metapolitefsi – i.e., the period after the establishment of
the Third Hellenic Republic (1974 to 1993). Building on a novel dataset of expenses to
prefectures and subsidies to municipalities, we employ a Difference-in-Differences framework
and a Regression Discontinuity Design respectively. Our analysis suggests that incumbent
parties diverted prefectural expenses towards their political strongholds, and subsidies to
politically aligned mayors. We argue that the expansion of intergovernmental transfers which
contributed significantly to the derailment of the Greek state resulted from the transformation
of the political system from traditional patron-client relationships to bureaucratic clientelism.
On this basis, appointed prefects and politically aligned mayors became major components of
a centralized party machine to mobilize voters through mass memberships “at the level of the
town and the village” in the new era of Metapolitefsi.
