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Objectives. How is government spending used strategically in South Korea and Taiwan? As nations generally considered to have weathered democratization, government allocations in South Korea and Taiwan are instructive on how spending may be used strategically without undermining democratization.

Methods. The similar sociocultural, historical, political, and economic experiences of the two nations underlie a most-similar-systems approach to study how their differences influence diversity in strategic spending and, correspondingly, political outcomes such as size of the government party in the legislature. This article evaluates defense and civilian expenditures for South Korea and Taiwan from 1975 to 2006.

Results. Three results are interesting. First, different elections—legislative elections in South Korea, presidential elections in Taiwan—lead to increases in spending. Second, in both nations, defense spending increases in election years but not social spending; however, defense spending benefits the government-party in the legislature in South Korea but not in Taiwan. Third, when the strategic uses of spending are accounted for, democratization does not directly affect allocations.

Conclusions. These results explicate that government spending is a viable resource for party building in new democracies; however, the results also underscore that governing parties in new democracies benefit from spending only insofar as it is used to build the nation's or party's strengths—not undermine the opposition—under competitive elections.