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Governance and rural public expenditures in Latin America: The impact on rural development

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  • Anríquez, Gustavo

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).

Suggested Citation

  • Anríquez, Gustavo, "undated". "Governance and rural public expenditures in Latin America: The impact on rural development," ESA Working Papers 289049, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    • Handle: RePEc:ags:faoaes:289049
    DOI: 10.22004/ag.econ.289049
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    Cited by:

    1. Galinato, Gregmar I. & Galinato, Suzette P., 2013. "The short-run and long-run effects of corruption control and political stability on forest cover," Ecological Economics, Elsevier, vol. 89(C), pages 153-161.
    2. Berdegué, Julio A. & Carriazo, Fernando & Jara, Benjamín & Modrego, Félix & Soloaga, Isidro, 2015. "Cities, Territories, and Inclusive Growth: Unraveling Urban–Rural Linkages in Chile, Colombia, and Mexico," World Development, Elsevier, vol. 73(C), pages 56-71.

    More about this item

    Keywords

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    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, Innovation, 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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