Gustavo Anríquez (Agricultural and Development Economics Division, Food and Agriculture Organization)
Abstract
In this paper we examine the effects of the composition (between private and public goods) of government expenditures in the rural world, and the effect that corruption has in the political game that determines these allocation decisions. In the first section of this paper we develop a political economy model where corruption and trade openness counteract to determine, within a political equilibrium, the amount of public funds to be devoted to the rural world, and their composition between public and private goods. In the second section we contrast the implications of the political economy model with recently released data on rural public expenditures in Latin America. We find that corruption reduces the amount of public funds that reach the rural world, but not its composition. We also find that after accounting for the endogeneity of public expenditure decisions, the composition of these expenditures significantly determines rural development (as proxied by agricultural GDP).
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Publisher Info
Paper provided by Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA) in its series Working Papers with number
07-01.
Length: 45 pages Date of creation: 2007 Date of revision: Handle: RePEc:fao:wpaper:0701
Contact details of provider: Postal: Agricultural Sector in Economic Development Service FAO Viale delle Terme di Caracalla 00153 Rome Italy Phone: +39(6) 57051 Fax: +39 06 57055522 Email: Web page: http://www.fao.org/es/esa/ More information through EDIRC
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Find related papers by JEL classification: H2 - Public Economics - - Taxation, Subsidies, and Revenue H50 - Public Economics - - National Government Expenditures and Related Policies - - - General H41 - Public Economics - - Publicly Provided Goods - - - Public Goods O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
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