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The Political Economy of Attracting Public Funds: The Case of Lebanon

Listed author(s):
  • Nisreen Salti

    ()

    (Department of Economics, American University of Beirut)

  • Jad Chaaban

Using a new exceptional dataset on 80 poverty pockets in Lebanon in 2004, we propose to test the confessional and political channels of influence through which these pockets are potentially able to attract development assistance. Lebanon constitutes a perfect case study for the interaction of identity-based polarization and fractionalization (based on confession) and poverty in the context of a developing country. We investigate the effect on the level of development assistance funds transferred to municipal governments of polarization, fractionalization and sectarian distance at the level of the poverty pockets and find robust results indicating that polarization and fractionalization are significant determinants of a pocket’s ability to attract funding. We also find that one of our measures of sectarian distance, the share in the larger district of a poverty pocket’s largest sect, also generates more revenue for the pocket. Pockets with a mix of sects have greater ease in attracting funds, which is consistent with the prerogative of confessional balance in government policy dictated by the power-sharing game in the post-war era. The results are robust to the inclusion of a wide variety of controls. They put into question the design of effective channels to allocate development funds in polarized societies.

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Paper provided by Economic Research Forum in its series Working Papers with number 550.

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Length: 23
Date of creation: 09 Jan 2010
Date of revision: 09 Jan 2010
Publication status: Published by The Economic Research Forum (ERF)
Handle: RePEc:erg:wpaper:550
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  1. José G. Montalvo & Marta Reynal-Querol, 2005. "Ethnic Polarization, Potential Conflict, and Civil Wars," American Economic Review, American Economic Association, vol. 95(3), pages 796-816, June.
  2. Alan B. Krueger & Jitka Maleckova, 2002. "Education, Poverty, Political Violence and Terrorism: Is There a Causal Connection?," NBER Working Papers 9074, National Bureau of Economic Research, Inc.
  3. World Bank, 2005. "Lebanon : Public Expenditure Review, Reform Priorities for Fiscal Adjustment, Growth and Poverty Alleviation," World Bank Other Operational Studies 8480, The World Bank.
  4. Joan Esteban & Debraj Ray, 2008. "Polarization, Fractionalization and Conflict," Journal of Peace Research, Peace Research Institute Oslo, vol. 45(2), pages 163-182, March.
  5. Jean-Yves Duclos & Joan Esteban & Debraj Ray, 2004. "Polarization: Concepts, Measurement, Estimation," Econometrica, Econometric Society, vol. 72(6), pages 1737-1772, November.
  6. Alberto Alesina & Reza Baqir & William Easterly, 1997. "Public Goods and Ethnic Divisions," NBER Working Papers 6009, National Bureau of Economic Research, Inc.
  7. Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1243-1284.
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  9. repec:pri:rpdevs:krueger_maleckova_education_poverty_political is not listed on IDEAS
  10. repec:pri:rpdevs:krueger_maleckova_education_poverty_political.pdf is not listed on IDEAS
  11. Galasso, Emanuela & Ravallion, Martin, 2005. "Decentralized targeting of an antipoverty program," Journal of Public Economics, Elsevier, vol. 89(4), pages 705-727, April.
  12. William Easterly & Ross Levine, 1997. "Africa's Growth Tragedy: Policies and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1203-1250.
  13. Esteban, Joan & Ray, Debraj, 1994. "On the Measurement of Polarization," Econometrica, Econometric Society, vol. 62(4), pages 819-851, July.
  14. Betancourt, Roger & Gleason, Suzanne, 2000. "The Allocation of Publicly-Provided Goods to Rural Households in India: On Some Consequences of Caste, Religion and Democracy," World Development, Elsevier, vol. 28(12), pages 2169-2182, December.
  15. Marta Reynal-Querol, 2002. "Ethnicity, Political Systems, and Civil Wars," Journal of Conflict Resolution, Peace Science Society (International), vol. 46(1), pages 29-54, February.
  16. Dibeh, Ghassan, 2005. "The Political Economy of Postwar Reconstruction in Lebanon," WIDER Working Paper Series 044, World Institute for Development Economic Research (UNU-WIDER).
  17. Grosh, M.E. & Baker, J.L., 1995. "Proxy Means Tests for Targetting Social Programs. Simulations and Speculation," Papers 118, World Bank - Living Standards Measurement.
  18. Bardhan, Pranab & Mookherjee, Dilip, 2005. "Decentralizing antipoverty program delivery in developing countries," Journal of Public Economics, Elsevier, vol. 89(4), pages 675-704, April.
  19. José Garcia Montalvo & Marta Reynal-Querol, 2004. "Ethnic polarization, potential conflict and civil wars," Economics Working Papers 770, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2005.
  20. Banerjee, Abhijit & Somanathan, Rohini, 2007. "The political economy of public goods: Some evidence from India," Journal of Development Economics, Elsevier, vol. 82(2), pages 287-314, March.
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