Politics and Local Economic Growth: Evidence from India

2017 ◽  
Vol 9 (1) ◽  
pp. 229-273 ◽  
Author(s):  
Sam Asher ◽  
Paul Novosad
Keyword(s):  
Economic Growth ◽  
Private Sector ◽  
Economic Impact ◽  
Regression Discontinuity ◽  
Regression Discontinuity Design ◽  
Present Evidence ◽  
Share Prices ◽  
Local Economic Growth ◽  
Night Lights ◽  
Ruling Party

Political favoritism affects the allocation of government resources, but is it consequential for growth? Using a close election regression discontinuity design and data from India, we measure the local economic impact of being represented by a politician in the ruling party. Favoritism leads to higher private sector employment, higher share prices of firms, and increased output as measured by night lights; the three effects are similar and economically substantive. Finally, we present evidence that politicians influence firms primarily through control over the implementation of regulation. (JEL D72, L51, O17, O18, O43, R11)

Commodity Shocks and Incumbency Effects

2021 ◽  
pp. 1-20
Author(s):  
Lucas M. Novaes ◽  
Luis Schiumerini
Keyword(s):  
Economic Growth ◽  
Economic Performance ◽  
Regression Discontinuity ◽  
Commodity Prices ◽  
Quality Changes ◽  
Regression Discontinuity Design ◽  
Agricultural Commodities ◽  
Voter Preferences ◽  
Suggestive Evidence ◽  
Local Economic Growth

Abstract Why do incumbents enjoy an electoral advantage in some political settings but suffer from a disadvantage in others? We propose a novel explanation linking variation in incumbency effects with exogenous commodity shocks. While voters attempt to sanction incumbents for economic performance, changes in commodity prices affect their evaluations and condition the electoral fortunes of incumbents vis-à-vis challengers. We test our argument in Brazilian municipalities, combining a plausibly exogenous measure of variation in commodity prices with a close election regression discontinuity design. Our results show that increases in the price of agricultural commodities greatly enhance the prospects of incumbents, while negative shocks exacerbate their incumbency disadvantage, especially in rural municipalities. Further investigation suggests that commodity shocks do not operate via voter learning about candidate quality, changes in the pool of candidates, shifts in voter preferences, or strategic elite investments. Instead, we find suggestive evidence that commodity shocks affect voters' evaluations through their effect on local economic growth.

scholarly journals Elections and the Regression Discontinuity Design: Lessons from Close U.S. House Races, 1942–2008

2011 ◽  
Vol 19 (4) ◽  
pp. 385-408 ◽  
Author(s):  
Devin Caughey ◽  
Jasjeet S. Sekhon
Keyword(s):  
Regression Discontinuity ◽  
Covariate Adjustment ◽  
Regression Discontinuity Design ◽  
Present Evidence ◽  
Model Based ◽  
Covariate Balance ◽  
Ex Ante ◽  
And Control

Following David Lee's pioneering work, numerous scholars have applied the regression discontinuity (RD) design to popular elections. Contrary to the assumptions of RD, however, we show that bare winners and bare losers in U.S. House elections (1942–2008) differ markedly on pretreatment covariates. Bare winners possess largeex antefinancial, experience, and incumbency advantages over their opponents and are usually the candidates predicted to win byCongressional Quarterly's pre-election ratings. Covariate imbalance actually worsens in the closest House elections. National partisan tides help explain these patterns. Previous works have missed this imbalance because they rely excessively on model-based extrapolation. We present evidence suggesting that sorting in close House elections is due mainly to activities on or before Election Day rather than postelection recounts or other manipulation. The sorting is so strong that it is impossible to achieve covariate balance between matched treated and control observations, making covariate adjustment a dubious enterprise. Although RD is problematic for postwar House elections, this example does highlight the design's advantages over alternatives: RD's assumptions are clear and weaker than model-based alternatives, and their implications are empirically testable.

scholarly journals When Running for Office Runs in the Family: Horizontal Dynasties, Policy, and Development in the Philippines

2021 ◽  
pp. 001041402110242
Author(s):  
Dean Dulay ◽  
Laurence Go
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Government Spending ◽  
Regression Discontinuity ◽  
The Philippines ◽  
Institutional Constraints ◽  
Regression Discontinuity Design ◽  
Policy Choices ◽  
The Family ◽  
Growth Economic

Political dynasties exist in practically every type of democracy, but take different forms in different places. Yet the types of dynastic structures have remained unexplored. We argue that horizontal dynasties—multiple members from the same political family holding different political offices concurrently—affect policymaking by replacing potential political rivals, who may oppose an incumbent’s policy choices, with a member of the family. But in developing countries, the policy change that accrues from dynastic status may not lead to higher levels of economic development. We test this argument’s implications in the Philippines. Using a close elections regression discontinuity design on a sample of mayors, we show that (i) horizontally dynastic mayors have higher levels of government spending, (ii) direct institutional constraints are the mechanism that drives this core result, and (iii) horizontally dynastic mayors do not lead to higher economic growth economic growth or lower poverty.

scholarly journals Impact of the Economic Impact Payments on Consumer Spending:\\ Analysis on a Granular Level of American Counties

2021 ◽  
Vol 2 (1) ◽  
pp. 8-18
Author(s):  
Otakar Kořínek
Keyword(s):  
Economic Impact ◽  
Regression Discontinuity ◽  
Causal Effect ◽  
Regression Discontinuity Design ◽  
Time Transfer ◽  
Consumer Spending ◽  
Private Companies ◽  
Transfer Payments ◽  
Governmental Policy ◽  
The Impact

This paper draws on weekly consumer spending data collected by American private companies to analyze the impact of the Economic Impact Payments on consumer spending in American counties. We use regression discontinuity design to quantify the causal effect of the Stimulus Checks on spending and use heterogeneity in economic and demographic factors to determine which groups of counties increased their spending the most, to see what factors affected the Stimulus Checks’ effectiveness. We then use the observed difference in impact across groups of counties to discuss whether the Stimulus Checks were the optimal governmental policy in the crisis and discuss the effectiveness of one-time transfer payments in future recessions.

scholarly journals (A)Political Constituency Development Funds: Evidence from Pakistan

2019 ◽  
pp. 1-18
Author(s):  
Rabia Malik
Keyword(s):  
Strong Evidence ◽  
Regression Discontinuity ◽  
Distributive Politics ◽  
Regression Discontinuity Design ◽  
Development Fund ◽  
Partisan Bias ◽  
Development Patterns ◽  
Ruling Party

Most of the distributive politics literature focuses on how incumbent politicians allocate development resources in the absence of spending rules, and on the politicization of rules when they do determine distribution. What is less clear is whether politically neutral spending rules lead to neutral spending. Using new data on a long-running federal development fund and elections from Pakistan in a regression discontinuity design, the author presents strong evidence that the ruling party manipulated fund distribution to disproportionately benefit its co-partisans and punish the weakest opposition. Considering various factors, partisan bias is the most plausible explanation. These findings are important not only because the purpose of rules-based funds is to prevent politicized distribution but also because they have implications for development patterns and for using such funds to address questions about legislator effort and patronage patterns within constituencies, which requires assuming that legislators do receive their share of funds in the first place.

scholarly journals The unintended psychological and behavioral drawbacks of big push strategies

2020 ◽  
Author(s):  
Xin Qin ◽  
Kai Chi Yam ◽  
Guangrong Ma ◽  
Chen Chen ◽  
Hang Zhu ◽  
...  
Keyword(s):  
Economic Growth ◽  
Regression Discontinuity ◽  
Poverty Rate ◽  
Regression Discontinuity Design ◽  
Developing Regions ◽  
Selfish Behavior ◽  
Policy Makers ◽  
Psychological Entitlement ◽  
Western Development ◽  
Big Push

Governments and policy makers often adopt big push strategies to help under-developing regions achieve economic growth and shake off poverty. Although numerous studies have documented big push strategies’ positive impacts on indicators of economic development (e.g., poverty rate, unemployment rate, etc.), the current research presents evidence of serious psychological and behavioral drawbacks of such policies. Specifically, we examine China’s Great Western Development (GWD) Program as a recent prominent example of a big push strategy, in which about 370 million people receive preferential benefits while more than 1 billion people do not. Using a regression discontinuity design based on distance from the boundary of the GWD Program (+/- 100 km), we find that individuals residing in non-GWD regions report higher levels of psychological entitlement compared to their counterparts residing in GWD regions. As a result of increased psychological entitlement, these individuals engage in more selfish behavior and less prosocial behavior. Our results offer initial evidence of the unintended psychological and behavioral consequences of big push strategies.

THE ROLE OF HUMAN CAPITAL IN GAINING AND SUSTAINING COMPETETIVE ADVANTAGE OF COMPANIES

2018 ◽  
Vol 28 (5) ◽  
pp. 1557-1562
Author(s):  
Visar Ademi
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Private Sector ◽  
Small Businesses ◽  
Formal Education ◽  
Good Practice ◽  
Education Institution ◽  
Business Community ◽  
Guest Speaker ◽  
Practical Training

In today’s global competitive arena the term “knowledge economy” is no mere slogan. It points to the very real fact that economic activities are increasingly knowledge intensive and that in this globalized world, success will come to those that are able to generate and harness knowledge in order to stay ahead of the pack. Research shows that in economies that do not have sufficient infrastructure, natural resources or may be designed as high cost base locations, comparative advantage has shifted to knowledge-based activities that cannot be transferred around the world without a significant cost. High knowledge and skills based economies will most likely be able to attract and retain investments in industries with a strong future. It is no secret that good education lies at the heart of economic growth and development. At the same time, improving the quality and relevance of education is enormously difficult not least because there is no one single policy measure that will do so effectively.Macedonia is not exclusion to this fact. The Macedonia’s employers and employees face a huge talent management dilemma. Analyses by all relevant institutions (World Bank, NGOs) and interviews with multiple representatives from the private sector companies indicate that while the labor pool is growing (supply side), it does not provide the skills needed by employers (demand side) so, that they could be competitive and further grow in today’s market. Employers are nearly unified in their criticism of an education system that produces graduates with limited practical experience and no soft skills transferable to the workplace. This is largely due to a lack of experiential education, competency based curricula, pragmatic guidance, which fails to meet the needs of the business community. The burden falls most often on employers to provide practical training, usually on the job. While in-company training is good practice, the scale of the skill gap requires a cost and internal training capability that many enterprises cannot afford, creating a disincentive for businesses to hire new employees.The dilemma has impacted job seekers (official unemployment in Macedonia is around 28% as of December 2017) and contributes to lower overall economic growth. It is especially problematic for micro and small enterprises (MSEs), which make up a large proportion of employment in Macedonia. MSE size and limited capacity makes their employees skills, experience and multitasking capabilities that much more critical for growth. Additionally, MSEs often lack the resources necessary to effectively train and maximize the productivity of their staff. As a result, sustained employment growth within Macedonia must include the development of a pipeline of skilled employees for microenterprises, including bolstering the capacity of small businesses to organize and train their workers. On the other side, the formal education institution dislike they way the private sector manages their employees. According to many of them, this is due to the fact that companies believe that their performance in the market is not directly linked with the human capital performance. In addition, education holds to the belief that private sector companies are not engaged enough in creating the next pool of talents in Macedonia. When they are invited to participate in the classrooms as expert of guest speaker, hire or engage students they show little interest. To conclude, the education institution believes that private sector companies in Macedonia consider the investment in human capital as a cost and not an investment.

Sign in / Sign up

Export Citation Format

Share Document