Village Elections, Public Goods Investments and Pork Barrel Politics, Chinese-style

A key issue in political economy concerns the accountability that governance structures impose on public officials and how elections and representative democracy influence the allocation of public resources. In this paper we utilise a unique set of survey data set from nearly 2450 randomly selected villages describing China's recent progress in village governance reforms and its relationship to the provision of public goods in rural China between 1998 and 2004. Two sets of questions are investigated using an empirical framework based on a theoretical model in which local governments must decide to allocate fiscal resources between public goods investments and other expenditures. The empirical analysis - both in the descriptive and econometric analyses - suggests that when the village leader is elected directly, ceteris paribus, the provision of public goods rises (compared to when the leader is not elected directly by villagers). Thus, in this way it is possible to conclude that democratisation - at least at the village level in rural China - appears to increase the quantity of public goods investment. Second, we seek to understand the mechanism that is driving the results. Also based on the survey data, we find that when village leaders (who had been directly elected) were able to implement more public projects during their terms of office, they, as the incumbent, were more likely to be re-elected. In this way, we argue that the link between elections and investment may be a rural China version of pork barrel politics.