Governance and Rural Public Expenditures in Latin America. The Impact on Rural Development

Gustavo Anríquez

No 07-01, Working Papers from Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA)

Abstract: In this paper we examine the effects of the composition (between private and public goods) of government expenditures in the rural world, and the effect that corruption has in the political game that determines these allocation decisions. In the first section of this paper we develop a political economy model where corruption and trade openness counteract to determine, within a political equilibrium, the amount of public funds to be devoted to the rural world, and their composition between public and private goods. In the second section we contrast the implications of the political economy model with recently released data on rural public expenditures in Latin America. We find that corruption reduces the amount of public funds that reach the rural world, but not its composition. We also find that after accounting for the endogeneity of public expenditure decisions, the composition of these expenditures significantly determines rural development (as proxied by agricultural GDP).

Keywords: Corruption; trade openness; public spending; rural development; public goods. (search for similar items in EconPapers)
JEL-codes: H2 H41 H50 O13 Q10 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2007
New Economics Papers: this item is included in nep-agr, nep-pbe and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Governance and rural public expenditures in Latin America: The impact on rural development (2007)
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