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Political economy of infrastructure spending in India


  • Khemani, Stuti


This paper examines a puzzle in the political economy of infrastructure in India -- the co-existence of relatively low shares of capital spending in public budgets alongside evidence of large demand for village infrastructure from poor voters. It argues that this pattern is due to infrastructure projects being used at the margin for political rent-seeking, while spending on employment and welfare transfers are the preferred vehicles to win votes for re-election. New suggestive evidence on the variation of public spending composition across states, and within states over time is offered that is consistent with this argument. This evidence underscores a growing argument in the development literature that the level and composition of public spending per se may not be sufficient metrics to assess the quality of public goods policies -- greater infrastructure spending in some contexts may go to political rents rather than to the actual delivery of broad public goods for growth and poverty reduction.

Suggested Citation

  • Khemani, Stuti, 2010. "Political economy of infrastructure spending in India," Policy Research Working Paper Series 5423, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5423

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    References listed on IDEAS

    1. Alberini, Anna & Boyle, Kevin & Welsh, Michael, 2003. "Analysis of contingent valuation data with multiple bids and response options allowing respondents to express uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 40-62, January.
    2. Welsh, Michael P. & Poe, Gregory L., 1998. "Elicitation Effects in Contingent Valuation: Comparisons to a Multiple Bounded Discrete Choice Approach," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 170-185, September.
    3. Wang, Hua, 1997. "Treatment of "Don't-Know" Responses in Contingent Valuation Surveys: A Random Valuation Model," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 219-232, February.
    4. Cameron, Trudy Ann & Poe, Gregory L. & Ethier, Robert G. & Schulze, William D., 2002. "Alternative Non-market Value-Elicitation Methods: Are the Underlying Preferences the Same?," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 391-425, November.
    5. Wang, Hua & Whittington, Dale, 2005. "Measuring individuals' valuation distributions using a stochastic payment card approach," Ecological Economics, Elsevier, vol. 55(2), pages 143-154, November.
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    Cited by:

    1. Jorge Martínez-Vázquez & Violeta Vulovic & Blanca Moreno Dodson, 2012. "The Impact of Tax and Expenditure Policies on Income Distribution: Evidence from a Large Panel of Countries," Hacienda Pública Española, IEF, vol. 200(1), pages 95-130, March.
    2. Strand, Jon, 2012. "Low-level versus high-level equilibrium in public utility services," Journal of Public Economics, Elsevier, vol. 96(1), pages 163-172.
    3. Fiszbein, Ariel & Matsuda, Yasuhiko, 2012. "Matching reforms to institutional realities : a framework for assessing social service delivery reform strategies in developing countries," Policy Research Working Paper Series 6136, The World Bank.
    4. Sheahan, Megan & Liu, Yanyan & Barrett, Christopher B. & Narayanan, Sudha, 2014. "The political economy of MGNREGS spending in Andhra Pradesh:," IFPRI discussion papers 1371, International Food Policy Research Institute (IFPRI).
    5. Cavallo, Eduardo & Daude, Christian, 2011. "Public investment in developing countries: A blessing or a curse?," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 65-81, March.
    6. Kieu-Trang Nguyen & Quoc-Anh Do & Anh Tran, 2011. "One Mandarin Benefits the Whole Clan: Hometown Infrastructure and Nepotism in an Autocracy," Working Papers 18-2011, Singapore Management University, School of Economics.
    7. repec:unu:wpaper:wp2012-37 is not listed on IDEAS
    8. repec:unt:jnapdj:v:24:y:2017:i:2:p:113-139 is not listed on IDEAS

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    Public Sector Economics; National Governance; Public Sector Management and Reform; Parliamentary Government; Debt Markets;

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