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Political economy of infrastructure spending in India

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Author Info

  • Khemani, Stuti

Abstract

This paper examines a puzzle in the political economy of infrastructure in India -- the co-existence of relatively low shares of capital spending in public budgets alongside evidence of large demand for village infrastructure from poor voters. It argues that this pattern is due to infrastructure projects being used at the margin for political rent-seeking, while spending on employment and welfare transfers are the preferred vehicles to win votes for re-election. New suggestive evidence on the variation of public spending composition across states, and within states over time is offered that is consistent with this argument. This evidence underscores a growing argument in the development literature that the level and composition of public spending per se may not be sufficient metrics to assess the quality of public goods policies -- greater infrastructure spending in some contexts may go to political rents rather than to the actual delivery of broad public goods for growth and poverty reduction.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5423.

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Date of creation: 01 Sep 2010
Date of revision:
Handle: RePEc:wbk:wbrwps:5423

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Related research

Keywords: Public Sector Economics; National Governance; Public Sector Management and Reform; Parliamentary Government; Debt Markets;

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Cited by:
  1. Jorge Martinez-Vazquez & Blanca Moreno-Dodson & VIoleta Vulovic, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1225, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
  2. Kieu-Trang Nguyen & Quoc-Anh Do & Anh Tran, 2011. "One Mandarin Benefits the Whole Clan: Hometown Infrastructure and Nepotism in an Autocracy," Working Papers 18-2011, Singapore Management University, School of Economics.
  3. , Aili Mari, 2012. "Donor Assistance and Political Reform in Tanzania," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  4. Eduardo A. Cavallo & Christian Daude, 2008. "Public Investment in Developing Countries: A Blessing or a Curse?," Research Department Publications 4597, Inter-American Development Bank, Research Department.
  5. Fiszbein, Ariel & Matsuda, Yasuhiko, 2012. "Matching reforms to institutional realities : a framework for assessing social service delivery reform strategies in developing countries," Policy Research Working Paper Series 6136, The World Bank.
  6. Strand, Jon, 2012. "Low-level versus high-level equilibrium in public utility services," Journal of Public Economics, Elsevier, vol. 96(1), pages 163-172.

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