Project Details
Projekt
Regional favoritism and development
Subject Area
Economic Policy, Applied Economics
Term
from 2019 to 2023
Project identifier
Deutsche Forschungsgemeinschaft (DFG) - Project number 423358188
Why some countries seem to be perpetually trapped in poverty is arguably the most important question in Economics. On this point, an influential literature suggests that an important cause for the vastly different levels of development across the globe is politics. In particular, it is argued that governments in under-developed countries often choose policies that are inefficient and cause severe economic distortions. One prominent and by all accounts costly example of such inefficient policies is regional favoritism - the distortion of policies by the government to the benefit of selected regions or groups at the expense of the country as a whole. It is, however, puzzling why governments would continue to engage in regional favoritism or, more generally, maintain policies that are clearly suboptimal. The purpose of this project is to provide a comprehensive answer to this question. We will thus study the motivation underlying regional favoritism, the means adopted, as well as the consequences. The specific questions that we plan to explore include: 1. Who is the main beneficiary from regional favoritism? Does regional favoritism take the form of public goods that benefit the population at large or are resources channeled in ways that benefit mostly the regional elite? Are there differences between individuals with different characteristics, e.g. do individuals that share the ethnicity of the national leader benefit more than other individuals? 2. How are the resources used by favored regions? Does favoritism help to increase regional growth in the long-run or do the additional resources only expand short-term consumption? Do educational attainment and health outcomes, for example, improve in the regions that are favored? 3. Why do governments engage in favoritism? What political incentives matter in autocratic contexts? Or are leaders mainly motivated by a home bias - an emotional, nonpolitical attachment to their home region or their group? Do individuals' political attitudes change in response to the degree of favoritism they experience? These questions have not yet been comprehensively answered by previous studies on regional favoritism in sub-Saharan Africa.Thus, by studying them (while emphasizing the institutional heterogeneity of sub-Saharan African countries and the differences in motives for regional favoritism this heterogeneity implies), we will make a substantive contribution to the literature. Specifically, exploring these questions will not only advance our understanding of the causes and consequences of regional favoritism in the developing world, but also allow us to derive practical recommendations as to how incentives to engage in inefficient policies can be overcome or, at least, how their adverse consequences can be mitigated.
DFG Programme
Research Grants
