Does political competition lead to better HDI? Evidence from the Indian states..

Nice paper by NIPFP econs – Bharatee Bhushan Dash and Sacchidananda Mukherjee.

They say political competition does improve HDI outcomes in States:

Recently, it has been argued that political competition may have similar effects on economic performance as market competition. This study empirically  examines this proposition by linking political competition with the Human  Development Index (HDI) of the Indian states.

The findings suggest that politically competitive governments perform well along the HDI. A more  detailed analysis also shows that the rural India benefits the most from the  intense political competition as compared to urban India. We also found that if  the same government rules a state for a relatively longer period, it helps the state in achieving higher HDI score.

Increasing voter participation found to be  positively associated with HDI score, but this finding is confined to the sample of major Indian states only. Increasing public spending on developmental  activities is also found to have a positive and significant effect on HDI  performance. These findings are robust to various forms of sensitivity  analyses.

Hmm..It involves comparing 25 states:

Our empirical analysis has used a dataset of 25 Indian states, includes both major and minor ones, spread across five rounds of HDI scores (1983, 1993, 1999-2000, 2004-05 and  2009-10) to examine the relationship between political competition and human development  performance (see the Appendix, Table A1, for more information).

Measuring HDI and political competition of the Indian states holds the centre stage of this study. Three development indicators; inflation and inequality adjusted per capita consumption expenditure, the composite indicator on educational attainment, and the composite indicator on health attainment; are considered and National Human Development Report’s (2001) methodology is used to estimate HDI scores for the Indian states. HDI ranges between zero and one and a higher value would imply better HD performance.

Following the same strategy as most of the empirical studies have (see Padovano and Ricciuti (2009) and Besley et al. (2010) for instance), we have used the winning differential, the difference between the seat shares of two largest parties in the state assembly elections, to measure the degree of political competition.9 Winning differential is a more appropriate indicator of political competition as it measures the degree of uncertainty in the electoral outcomes (Blais and Lago, 2008), i.e. the lesser the winning differential the higher the degree of electoral uncertainty. Moreover, the differential measure suits well for the present study as, in practice, the competition to form government in the Indian states has largely been between top two parties, even though the constitution of India has allowed for a multi-party electoral  system (Abbas et al., 2010).

To express the degree of political competition in an ascending   scale, we have used ‘one minus the winning differential’ in the regression equation. After the  change of scale, our political competition measure generates values between zero and one,  higher value indicates a higher level of political competition.

Interesting stuff.

Thinking about political parties as firms competing for votes (goods and services) is a great application of micro principles into politics. We usually say more competition leads to better choice outcomes in terms of products and services. How about political delivery when we have parties posing as monoploy duopoly, oligopoly etc etc..?

Need to read up..

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