Electoral Accountability and the Natural Resource Curse: Theory and Evidence from India

Amrita Dhillon (), Pramila Krishnan, Manasa Patnam and Carlo Perroni

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: The literature on the effects of natural resource abundance on economic growth is converging to the view that institutions play a central role. In this paper, we exploit the break up of three of the biggest Indian states, comprising areas with some of the largest endowments of natural resources in the country, to explore how the link between electoral accountability and natural resource abundance can explain differences in outcomes. Our theoretical framework shows that while states inheriting a larger share of natural resources after break up are potentially richer, the spatial distribution of these natural resources within these state can worsen economic outcomes by lowering electoral accountability. We employ a sharp regression discontinuity design to estimate the causal effect of secession and concentrated resources on growth and inequality at the sub-regional level, using data on satellite measurements of night-time lights. Consistent with our theoretical predictions, the economic effect of secession is generally favourable. However, states that inherit a large fraction of mineral rich constituencies experience worse outcomes. This may be accounted for by lower electoral accountability in those areas.

Keywords: Natural Resources and Economic Performance; Political Secession; Fiscal Federalism (search for similar items in EconPapers)
JEL-codes: C72 H77 O13 O43 Q34 (search for similar items in EconPapers)
Date: 2016-07-06
New Economics Papers: this item is included in nep-dev, nep-ger and nep-gro
Note: pk237
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: ELECTORAL ACCOUNTABILITY AND THE NATURAL RESOURCE CURSE: THEORY AND EVIDENCE FROM INDIA (2016)
Working Paper: Electoral Accountability and the Natural Resource Curse: Theory and Evidence from India (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:1639

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