COMBARNOUS, Francois; FAURE, Y.-A.; ROUGIER, Eric

doi:10.1057/s41287-021-00453-6

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COMBARNOUS, Francois

Groupe de Recherche en Economie Théorique et Appliquée [GREThA]

FAURE, Y.-A.

ROUGIER, Eric

Groupe de Recherche en Economie Théorique et Appliquée [GREThA]

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European Journal of Development Research. 2021-03

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The present paper assesses the impact of the size of the municipal public sector on local economic growth and the extent to which it is conditioned by different forms of political turnover. By relying on small but original dataset on municipalities of the Brazilian state of Ceará over the period 2000–2012 and by addressing both endogeneity and spatial correlation issues, we find evidence of an adverse effect of the size of public employment on local economic growth, which is moderated by higher political stability when taking the form of dynastic control. We also find that the size of public employment crowds in public investment in our sample, with this positive pattern being amplified in municipalities controlled by political dynasties where policy’s continuity is higher. Our findings therefore reject the assumption of a crowding-out effect of redistributive politics on public investment for the municipalities of Ceará. Our medium-run framework therefore suggests that political dynasties can be advantageous for local economic growth in our limited sample of municipalities. Yet, in the longer-run, the balance between the positive stabilization effects and the possible adverse effects related to corruption should be investigated by future research. © 2021, European Association of Development Research and Training Institutes (EADI).< Réduire

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Political turnover, public employment, and local economic development: New empirical evidence on the impact of local political dynasties in the Brazilian “Nordeste”

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