Politics and Public Goods in Developing Countries: Evidence from the Assassination of Rajiv Gandhi
40 Pages Posted: 10 Jan 2015 Last revised: 14 Jul 2015
Date Written: July 14, 2015
This paper employs an instrumental variables approach to identify the effect of party ideology on policy outcomes. Exogenous variation in party representation is generated by the assassination of the leader of the populist Congress Party, which occurred mid-way through India’s national elections in 1991, and which had the effect of dramatically increasing the probability of Congress victory for a sub-set of constituencies. Using this variation, I find that local representation by the ruling Congress party leads to a substan- tial increase in the provision of public goods favored by the poor, consistent with the party’s expressed populist agenda. Among the salient changes are increases in the availability of drinking water and declines in infrastructure such as productive electrification and paved roads. I then compare these effects to those obtained through a regression discontinuity design, for which treatment effects are necessarily identified only for closely contested elections. Here I find little effect of Congress representation on public goods allocations, consistent with models emphasizing the importance of both the identity of the winning party and the margin of its victory in determining policy outcomes.
Keywords: Political economy; Public goods; India
JEL Classification: D71, D72, H41, O10
Suggested Citation: Suggested Citation