The Political Economy of Roads in Kenya

Four econs in this interesting paper look at political economy of road development in Kenya.

They show how road development in a region depends political party in power. There are two factors –  community (belonging to the same community as leaders of the ruling party) or geography (living in a place where the current leaders once lived):

By reducing trade costs and promoting economic specialization across regions, transportation infrastructure is a determining factor of growth. Yet, developing countries are characterized by infrastructure underdevelopment, the general lack of funding being often mentioned as the main reason for it. Then, even when such investments are realized, the welfare gains associated to them might be captured by political elites that are strong enough to in uence their allocation across space.

We study this issue by investigating the political economy of road placement in Kenya, an African country where politicians are said to favour individuals from their region of origin or who share their ethnicity. Combining district-level panel data on road building with historical data on the ethnicity and district of birth of political leaders, we show that presidents is proportionately invest in their district of birth and those regions where their ethnicity is dominant. It also seems that the second most powerful ethnic group in the cabinet and the district of birth of the public works minister receive more paved roads. In the end, a large share of road investments over the period can be explained by political appointments, which denotes massive and well-entrenched ethno-favoritism in Kenyan politics.

The benchmark against which they measure this road network developed by British. It is unlikely that these roads will have any patronage issues. So it has this mapping of road development  with benchmark and figuring out whether  the development was because of economic  or political reasons.

More specifically:

Our results suggest that: (a) the president uses his unconstrained powers to massively distort national road building in favor of those districts where his ethnicity is well-represented (an additional 10.44 km of paved roads per district every three years). The President’s district of birth receives an additional 46.33 km of paved roads every three years; (b) the second largest ethnic group in the cabinet seems to receive an additional 11.85 km of paved roads per district every three years; (c) the public works ministry is a strategic position for road investments as the district of birth of the public works minister obtains an additional 8.53 km of paved roads every three years. We discuss and give possible historical explanations for these fi ndings.

There are three ways in which politician give returns  to their backers:

The patronage hypothesis stipulates that elected politicians target public spending so as to reward their loyal backers. Those are usually co-ethnics in the African context (Bates 1983; Bratton and Van de Walle 1997; Posner 2005). Politicians could do so for many reasons:

(a) “ethnic altruism”: leaders intrinsically maximize their utility by increasing the one of their co-ethnics (Becker 1957, Habyarimana et al 2007);
(b) “ethnic reciprocity”: leaders could not become leaders without the initial support of powerful members (the “big men”) of their own community, who ask to be retributed for their initial investments;
(c) “our turn to eat” game (Posner 2005; Bratton and Kimenyi 2008; Kimenyi and Romero 2008, Wrong 2009)6; knowing that the previous leaders disproportionately favored their own people, current leaders nd it “fair” to do the same for their own people. They also know that their tenure might be temporary and that the next leaders will do the same when their turn comes, which reinforces them in spending more now. By doing so, they encourage the next leaders to act correspondingly, and so on. All successive leaders become the main actors of an “our turn to eat” game, which is a bad equilibrium unlikely to be broken. The issue is who the fi rst mover was and why he adopted ethnic and not nation-building policies.

Hmm. Hence the paper is titled our turn to eat the game…There is also a superb discussion on political economy of development. Nice literature survey as well..

What lessons for donors etc?

Then, as ethno-favoritism feeds interethnic resentment and interethnic resentment feeds political instability (e.g., ethno-nationalism), we consider that foreign donors should be more attentive to this issue when funding infrastructure projects in developing countries.

Hmm.

As I read this paper, I could not help but seeing a lot of similarities with India as well. It will be great if such a paper is expanded to India as well. The scope could be much smaller to a few states first and then expanded over a period of time. And here it is not just about building roads/public services to closed ones, but politicians also look to make huge returns from these projects. It is  like a win-win situation for both the politicians and their backers.

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