Local Inequality and Project Choice: Theory and Evidence from Ecuador

By Caridad Araujo, Francisco H. G. Ferreira, Peter Lanjouw, Berk Özler. 2006

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This paper provides evidence consistent with elite capture of Social Fund investment projects in Ecuador. Exploiting a unique combination of data-sets on village-level income distributions, Social Fund project administration, and province level electoral results, the authors test a simple model of project choice when local political power is unequally distributed. In accordance with the predictions of the model, poorer villages are more likely to receive projects that provide excludable (private) goods to the poor, such as latrines. Controlling for poverty, more unequal communities are less likely to receive such projects. Consistent with the hypothesis of elite capture, these results are sensitive to the specific measure of inequality used in the empirical analysis, and are strongest for expenditure shares at the top of the distribution.

Subfields: Economics and Econometrics, Political Science and International Relations, Safety Research

View Paper: https://www.semanticscholar.org/paper/4337800321248a47a9a2c572c7b39bbf85fadb26

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Citations in the corpus

Equity, efficiency and inequality traps: A research agenda (2007, unknown): “[6] are examples of specific empirical analyses.”
Community-Based Development and Poverty Alleviation: an Evaluation of China's Poor Village Investment Program (2010, unknown): “…provision, and targeting 1 Mansuri and Rao (2004) distinguish this from community-driven development in which communities are fully in control of projects. effectiveness (Alesina and La Ferrara, 2000; La Ferrara, 2002; Galasso and Ravallion, 2005; Banerjee and Somanathan, 2007; Araujo et al, 2008).”
Who is Vouching for the Input Voucher? Decentralized Targeting and Elite Capture in Tanzania (2011, unknown): “…social factors such as community homogeneity (Seabright, 1996) as well as design features of the program such as the size of the program (Galasso and Ravallion, 2005), the official eligibility criteria and whether the program concerns distribution of public or private goods (Araujo et al., 2008).”
State and Development: The Need for a Reappraisal of the Current Literature† (2016, background): “The empirical literature34 on capture suggests that the preconditions of local capture depend on (a) initial social and economic inequality in the local area 34 See, for example, Galasso and Ravallion (2005) for Bangladesh, Araujo et al (2008) for Ecuador, Ferraz and Finan (2009) for Brazil, Bardhan”
Who Is at the Wheel When Communities Drive Development? Evidence from the Philippines (2009, background): “Araujo et al. (2006) analyzed the links between local inequality and project choice in the context of the Ecuador’s Social Fund (FISE).”
Evaluating Anti-Poverty Programs (2005, background): “Small-area estimation methods can sometimes improve the trade-off by exploiting Census (or larger sample survey) data on covariates of the relevant outcomes and/or explanatory variables at local level; a good example in the present context can be found in Caridad et al. (2006). Another lens for unde”