Politics and Local Economic Growth: Evidence from India

American Economic Journal: Applied Economics, 2017, vol. 9, issue 1, 229-73

Abstract: 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-codes: D72 L51 O17 O18 O43 R11 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/app.20150512
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Citations: View citations in EconPapers (109)

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