The Political Economy of the Allocation of State Government Expenditures for the Industrial Sector

Atsushi Kato () and Atsushi Fukumi ()
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Atsushi Kato: Waseda University
Atsushi Fukumi: University of Hyogo

A chapter in Accelerators of India's Growth—Industry, Trade and Employment, 2020, pp 51-83 from Springer

Abstract: Abstract We investigate why some governments do not institute public policy conducive to industrialization from the viewpoint of the balance of political power between the agricultural and industrial sectors. More specifically, we examine whether a higher rural Gini coefficient—a proxy for the degree of political power of rural elites—tends to reduce the allocation of development expenditures favorable to the industrial sector at the state level in India. Our estimation results suggest that both the rural Gini coefficient and the rural population share have significant negative coefficients. These results imply that the political influence of the agricultural sector can limit the allocation of expenditures conducive to industrialization, resulting in the stagnation of regional state economies.

Keywords: Political economy; Political power; Gini coefficient; Development expenditure; Development capital expenditure; D7; H72; H76; O14 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isbchp:978-981-32-9397-7_4

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DOI: 10.1007/978-981-32-9397-7_4

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