Seeking votes - the political economy of expenditures by the Peruvian Social Fund (FONCODES), 1991-95

Norbert Schady

No 2166, Policy Research Working Paper Series from The World Bank

Abstract: President Alberto Fujimori created the Peruvian social Fund (FONCODES) in 1991 with the stated objectives of generating employment, helping to alleviate poverty, and improving access to social services. The author uses province-level data on monthly expenditures, socio-economic indicators, and electoral outcomes to analyze political influences on the timing and geographic distribution of FONCODES expenditures between 1991 and 1995. He finds that: 1) FONCODES expenditures increased significantly before elections. 2) FONCODES projects were directed at poor provinces, as well as provinces in which the marginal political impact of expenditures was likely to be greatest. The results are robust to many specifications and controls. The Peruvian data thus support predictions made in the literature on political business cycle as well the literature on political influences on the allocation of discretionary funds.

Keywords: Decentralization; Environmental Economics&Policies; Parliamentary Government; Health Economics&Finance; Election Systems; Health Economics&Finance; Environmental Economics&Policies; Parliamentary Government; Election Systems; Business in Development (search for similar items in EconPapers)
Date: 1999-08-31
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Citations: View citations in EconPapers (7)

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