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  3. American Economic Journal: Applied Economics
  4. January 2017
  5. Politics and Local Economic Growth: Evidence from India

Politics and Local Economic Growth: Evidence from India

  • Sam Asher
  • Paul Novosad
American Economic Journal: Applied Economics
vol. 9, no. 1, January 2017
(pp. 229-73)
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Abstract

Political favoritism affects the allocation of government resources, but is it consequential for growth? Using a close election regression discontinuity design and data from India, we measure the local economic impact of being represented by a politician in the ruling party. Favoritism leads to higher private sector employment, higher share prices of firms, and increased output as measured by night lights; the three effects are similar and economically substantive. Finally, we present evidence that politicians influence firms primarily through control over the implementation of regulation.

Citation

Asher, Sam, and Paul Novosad. 2017. "Politics and Local Economic Growth: Evidence from India." American Economic Journal: Applied Economics, 9 (1): 229-73. DOI: 10.1257/app.20150512

Additional Materials

JEL Classification

  • D72 Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
  • L51 Economics of Regulation
  • O17 Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
  • O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
  • O43 Institutions and Growth
  • R11 Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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