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Seeking votes - the political economy of expenditures by the Peruvian Social Fund (FONCODES), 1991-95

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Author Info

  • Schady, Norbert R.

Abstract

President Alberto Fujimori created the Peruvian social Fund (FONCODES) in 1991 with the stated objectives of generating employment, helping to alleviate poverty, and improving access to social services. The author uses province-level data on monthly expenditures, socio-economic indicators, and electoral outcomes to analyze political influences on the timing and geographic distribution of FONCODES expenditures between 1991 and 1995. He finds that: 1) FONCODES expenditures increased significantly before elections. 2) FONCODES projects were directed at poor provinces, as well as provinces in which the marginal political impact of expenditures was likely to be greatest. The results are robust to many specifications and controls. The Peruvian data thus support predictions made in the literature on political business cycle as well the literature on political influences on the allocation of discretionary funds.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2166.

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Date of creation: 31 Aug 1999
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Handle: RePEc:wbk:wbrwps:2166

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Keywords: Decentralization; Environmental Economics&Policies; Parliamentary Government; Health Economics&Finance; Election Systems; Health Economics&Finance; Environmental Economics&Policies; Parliamentary Government; Election Systems; Business in Development;

References

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  1. Rudiger Dornbusch & Sebastian Edwards, 1989. "Macroeconomic Populism in Latin America," NBER Working Papers 2986, National Bureau of Economic Research, Inc.
  2. Hardle, W., 1992. "Applied Nonparametric Methods," Papers 9204, Catholique de Louvain - Institut de statistique.
  3. Case, A., 1997. "Election Goals and Income Redistribution: Recent Evidence from Albania," Papers 177, Princeton, Woodrow Wilson School - Development Studies.
  4. Deacon, Robert T & Shapiro, Perry, 1975. "Private Preference for Collective Goods Revealed Through Voting on Referenda," American Economic Review, American Economic Association, vol. 65(5), pages 943-55, December.
  5. Dixit, Avinash K & Londregan, John, 1994. "The Determinants of Success of Special Interests in Redistributive Politics," CEPR Discussion Papers 1054, C.E.P.R. Discussion Papers.
  6. Schuknecht, Ludger, 1996. "Political Business Cycles and Fiscal Policies in Developing Countries," Kyklos, Wiley Blackwell, vol. 49(2), pages 155-70.
  7. Rudiger Dornbusch & Sebastian Edwards, 1991. "The Macroeconomics of Populism," NBER Chapters, in: The Macroeconomics of Populism in Latin America, pages 7-13 National Bureau of Economic Research, Inc.
  8. Peltzman, Sam, 1990. "How Efficient Is the Voting Market?," Journal of Law and Economics, University of Chicago Press, vol. 33(1), pages 27-63, April.
  9. Stuart Landon & David L. Ryan, 1997. "The Political Costs of Taxes and Government Spending," Canadian Journal of Economics, Canadian Economics Association, vol. 30(1), pages 85-111, February.
  10. Oliver LINTON, . "Applied nonparametric methods," Statistic und Oekonometrie 9312, Humboldt Universitaet Berlin.
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Cited by:
  1. André, Pierre & Mesplé-Somps, Sandrine, 2011. "Politics and the geographic allocation of public funds in a semi-democracy: The case of Ghana, 1996-2004," Proceedings of the German Development Economics Conference, Berlin 2011 6, Verein für Socialpolitik, Research Committee Development Economics.
  2. Sam Hickey, 2007. "Conceptualising the Politics of Social Protection in Africa," Brooks World Poverty Institute Working Paper Series 0407, BWPI, The University of Manchester.

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