Seeking Votes [electronic resource] : The Political Economy of Expenditures by the Peruvian Social Fund (FONCODES), 1991-95 / Schady, Norbert

By: Schady, NorbertContributor(s): Schady, NorbertMaterial type: TextTextPublication details: Washington, D.C., The World Bank, 1999Description: 1 online resource (36 p.)Subject(s): Allocation | Business Cycles | Business Environment | Business in Development | Competitiveness and Competition Policy | Data On Expenditures | Data Requirements | Debt Markets | Discretionary Funds | Distribution Of Expenditures | E-Government | Econometric Techniques | Expenditures | Finance and Financial Sector Development | Governance | Health Systems Development and Reform | Health, Nutrition and Population | Outcomes | Parliamentary Government | Politicians | Poverty Reduction | Private Sector Development | Public Expenditure | Public Expenditures | Public Sector Development | Public Sector Expenditure Analysis and Management | Social Expenditures | Social Funds | Social Policy | Social Programs | Social Services | Stated Objectives | Structural AdjustmentAdditional physical formats: Schady, Norbert.: Seeking Votes.Online resources: Click here to access online Abstract: A revised version was published as The Political Economy of Expenditures by the Peruvian Social Fund (FONCODES), 1991-95. American Political Science Review 94 (2, June): 289-304, 2000. As the literature on political influences on the allocation of discretionary funds predicts, spending by the Peruvian Social Fund, FONCODES, increased significantly before elections. FONCODES projects were also directed at provinces where the marginal political impact of expenditures was likely to be greatest. 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. Schady uses province-level data on monthly expenditures, socioeconomic indicators, and electoral outcomes to analyze political influences on the timing and geographic distribution of FONCODES expenditures between 1991 and 1995. He finds that: FONCODES expenditures increased significantly before elections; 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 cycles as well as the literature on political influences on the allocation of discretionary funds. This paper - a product of the Poverty Division, Poverty Reduction and Economic Management Network - is part of a larger effort in the network to understand the functioning and impact of social funds.
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A revised version was published as The Political Economy of Expenditures by the Peruvian Social Fund (FONCODES), 1991-95. American Political Science Review 94 (2, June): 289-304, 2000. As the literature on political influences on the allocation of discretionary funds predicts, spending by the Peruvian Social Fund, FONCODES, increased significantly before elections. FONCODES projects were also directed at provinces where the marginal political impact of expenditures was likely to be greatest. 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. Schady uses province-level data on monthly expenditures, socioeconomic indicators, and electoral outcomes to analyze political influences on the timing and geographic distribution of FONCODES expenditures between 1991 and 1995. He finds that: FONCODES expenditures increased significantly before elections; 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 cycles as well as the literature on political influences on the allocation of discretionary funds. This paper - a product of the Poverty Division, Poverty Reduction and Economic Management Network - is part of a larger effort in the network to understand the functioning and impact of social funds.

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