Inter-Regional Redistribution Through Infrastructure Investment: Tactical or Programmatic?

XREAP 2009-13

48 Pages Posted: 3 May 2011

See all articles by Albert Sole-Olle

Albert Sole-Olle

University of Barcelona; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: November 1, 2009

Abstract

In this paper we analyze the effects of both tactical and programmatic politics on the inter-regional allocation of infrastructure investment. We use a panel of data for the Spanish electoral districts during the period 1964-2004 to estimate an equation where investment depends both on economic and political variables. The results show that tactical politics do matter since, after controlling for economic traits, the districts with more ‘Political power’ still receive more investment. These districts are those where the incumbents’ Vote margin of victory/ defeat in the past election is low, where the Marginal seat price is low, where there is Partisan alignment between the executives at the central and regional layers of government, and where there are Pivotal regional parties which are influential in the formation of the central executive. However, the results also show that programmatic politics matter, since inter-regional redistribution (measured as the elasticity of investment to per capita income) is shown to increase with the arrival of the Democracy and EU Funds, with Left governments, and to decrease the higher is the correlation between a measure of ‘Political power’ and per capita income.

Keywords: Infrastructures, Political Economy, Redistribution

JEL Classification: R1, O4

Suggested Citation

Sole-Olle, Albert, Inter-Regional Redistribution Through Infrastructure Investment: Tactical or Programmatic? (November 1, 2009). XREAP 2009-13. Available at SSRN: https://ssrn.com/abstract=1825021 or http://dx.doi.org/10.2139/ssrn.1825021

Albert Sole-Olle (Contact Author)

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007
Spain

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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