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Elite Capture in Urban Development: Evidence from Indonesia

Rivayani Darmawan and Stephan Klasen
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Rivayani Darmawan: Georg-August-University Göttingen

No 145, Courant Research Centre: Poverty, Equity and Growth - Discussion Papers from Courant Research Centre PEG

Abstract: It has been argued that the potential gains of community-driven development (CDD) poverty programs are large as these can foster sustained poverty reduction. However, recent literature shows that community involvement can increase the risk of elite capture, particularly in more unequal communities. The risk is higher when the gap between the poor and the non-poor is larger with limited mobility between groups, the poor find it difficult to increase their bargaining power or voice their preferences. This paper contributes to the limited empirical literature on the existence of elite capture in social programs. Using community and household data from the Second Urban Poverty Project in Indonesia, we find robust evidence for the existence of elite capture under unequal communities. We further find that only when decision makers share similar characteristics with non-elites in terms of wealth, education and social networks, the share of pro-poor projects increases.

Keywords: Elite capture; Community-driven Development; Inequality; Poverty; Indonesia (search for similar items in EconPapers)
JEL-codes: D63 H42 I32 (search for similar items in EconPapers)
Date: 2013-08-23
New Economics Papers: this item is included in nep-ltv, nep-nps, nep-ppm, nep-sea and nep-ure
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