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Political Representation and the Provision of Public Goods: Theory and Evidence from Ethiopia

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  • Teferi Mergo

    (Department of Economics, University of Waterloo)

  • Alain-Desire Nimubona

    (Department of Economics, University of Waterloo)

  • Horatiu Rus

    (Department of Economics, University of Waterloo)

Abstract

While the salience of ethnicity as a factor in ruling coalition formation in African politics has been documented in the literature, less is known about its impact on various ethnic groups' economic outcomes. We construct a simple political economy model to illustrate a way in which investments in public goods in ethnic-based polities may depend on the quality of the ethnic groups' political representation with the federal government. We then exploit a natural experiment that took place in Ethiopia, following the institution of an ethnic federalism in the country in 1995. Using a Difference-in-Difference estimation strategy on repeated cross-sectional data constructed from Censuses and Welfare Monitoring Surveys, we confirm that better political representation improves access to public goods. In Ethiopia's ethnic-based federation, the quality of political representation varies across ethnic regions depending on whether their populations belong or not to the ruling ethnic group at the federal level. Along this line, we found that access to public goods has improved faster in the politically dominant Tigray region than in the other regions. Similarly, the hierarchy of public goods access rates' in different ethnic regions is consistent with the proximity of the political elites from different regions to the center of political power in the country. We also found that the regional disparities in terms of access to public goods are more pronounced in rural areas than in urban areas.

Suggested Citation

  • Teferi Mergo & Alain-Desire Nimubona & Horatiu Rus, 2019. "Political Representation and the Provision of Public Goods: Theory and Evidence from Ethiopia," Working Papers 1901, University of Waterloo, Department of Economics, revised Jan 2019.
  • Handle: RePEc:wat:wpaper:1901
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    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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