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Building networks: Investigating the quid pro quo between local politicians & developers

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  • Tandel, Vaidehi
  • Gandhi, Sahil
  • Tabarrok, Alex

Abstract

Mutually beneficial arrangements between politicians and real estate developers are common in many developing countries. We document what happens when the politician-developer nexus is disrupted by an election. We construct a novel dataset of real estate projects and electoral constituencies in Mumbai’s municipal government. We find that an incumbent party losing the election increases real estate project completion times by 5%. We find no effect of quasi-random redistricting or changes in voter preferences on project delays. We investigate two mechanisms for the slowdown associated with party turnover — delays in construction approvals around the time of the election and increase in litigation against projects after the election. While we see no rise in litigation, we find that delayed approvals near an election explain 23% of the increased total delays due to party change.

Suggested Citation

  • Tandel, Vaidehi & Gandhi, Sahil & Tabarrok, Alex, 2023. "Building networks: Investigating the quid pro quo between local politicians & developers," Journal of Development Economics, Elsevier, vol. 164(C).
    • Handle: RePEc:eee:deveco:v:164:y:2023:i:c:s0304387823000937
    DOI: 10.1016/j.jdeveco.2023.103138
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    More about this item

    Keywords

    Real estate markets; India; Elections;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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