Development Planning or Planning for the Loyal Partisans: A Case of Annual Development Plans in Punjab, Pakistan

Abstract

Partisan theory of distributive politics highlights the role of political incentives in the distribution of public resources. This paper is an attempt to investigate the potential manipulation in public resources at a sub-national level to test the relevance of this notion empirically. We have employed data from the annual development plans of the Punjab province of Pakistan from 1988-2016. Using the system GMM estimation technique, we have found significant resource diversion by the provincial government towards co-partisans at the district level. Moreover, the resource diversion gets even stronger specifically in the infrastructure sectors if the district possesses a clear majority of more than 75 percent of legislators of the provincial assembly allied with the ruling political party. The ruling party, therefore, seems to secure a simple majority by preferring clear majority districts over the swing or less safe districts. The incumbents also use development funds to cater to higher competition at the ballot by larger spending in the infrastructure sectors. However, they spend more in the education sector in the districts with higher voter turnout. We suggest the introduction of some economic formula in the spirit of the one followed for the current expenditures in the country for the distribution of development sector budget to avoid such distortions.