Abstract
In this study we examine the existence of regional favoritism in districts of Argentina (i.e., political leaders who systematically favor their district of birth). To do this, we build an annual panel of districts that includes records of nighttime luminosity, as a proxy for inequality and economic activity, and the district of birth of each governor between 1992–2013. The estimates arise from a two-way fixed effects model, an event study design and spatial and temporal placebos.
The results confirm the existence of regional favoritism for the Argentine case: inequality increases in the districts of birth of the governors up to 1.26% annually while they are in office. The existence of regional favoritism also translates into a significant increase in GDP—between 1.1% and 1.7% each year—. These results are robust to multiple robustness checks—including the incorporation of spatial effects—and spatial and temporal placebos. The findings of the study help to guide public management audit efforts and to achieve a more efficient use of fiscal resources. Ultimately, these findings constitute a warning against regional favoritism since it tends to favor the upper deciles of the income distribution—increases inequality between districts—and constitutes a case of clear inefficiency: more available resources in a district fails to reduce inequality.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
Some previous research include Elvidge et al. (1997) who find a high correlation between GDP and luminosity for a set of 21 countries—including Argentina—based on a regression analysis and Ebener et al. (2005) who find a high correlation between luminosity and GDP per capita. Doll et al. (2000) and Sutton and Costanza (2002), in addition to performing a regression analysis (of GDP as a function of luminosity), estimate the GDP per pixel on the map. More recently, Henderson et al. (2012) and Chen and Nordhaus (2011) have made contributions about the relationship between GDP growth and luminosity growth considering a broad panel of countries. Gonzalez et al. (2021a) have used the information provided by these luminosity maps to study the impact of natural disasters on economic growth.
Luminosity data collection began in 1970 and was declassified in 1972 (allowed public access ). However, between 1972 and 1992 the information was only available for consultation in the physical records at the University of Colorado (Elvidge et al. 2001).
A recent discussion on this topic can be found at: https://www.infobae.com/economia/2021/12/18/presupuesto-e-inflacion-por-que-es-tan-amplia-la-diferencia-entre-la-realidad-y-lo-que-escribe-el-gobierno-en-la-ley-de-leyes/.
References
Abman R, Carney C (2020) Agricultural productivity and deforestation: evidence from input subsidies and ethnic favoritism in Malawi. J Environ Econ Manage. https://doi.org/10.1016/j.jeem.2020.102342
Alesina A, La Ferrara E (2005) Ethnic diversity and economic performance. J Econ Lit 43(3):762–800
Asatryan Z, Baskaran T, Birkholz C, Gomtsyan D (2021a) Favoritism and firms: micro evidence and macro implications. ZEW discussion papers, vol 21-031. ZEW—Leibniz Centre for European Economic Research
Asatryan Z, Baskaran T, Hufschmidt P, Stocker A (2021b) Regional favoritism and human capital accumulation in Africa. Discussion paper, vol 21-030. ZEW (https://ftp.zew.de/pub/zew-docs/dp/dp21030.pdf)
Avis E, Ferraz C, Finan F (2018) Do government audits reduce corruption? Estimating the impacts of exposing corrupt politicians. J Polit Econ. https://doi.org/10.1086/699209
Ayadi M, Cahill J, Ngo-Le N (2018) Nightlight satellite imagery as a predictor for economic activity. Use case: Tunisia (Working paper, mimeo)
Baskaran T, Lopes da Fonseca M (2021) Appointed public officials and local favoritism: evidence from the German states. J Urban Econ. https://doi.org/10.1016/j.jue.2021.103354
Batzilis D (2020) The political determinants of government spending allocation and growth. Res Econ. https://doi.org/10.1016/j.rie.2020.07.001
Bommer C, Dreher A, Perez-Alvarez M (2022) Home bias in humanitarian aid: the role of regional favoritism in the allocation of international disaster relief. J Public Econ. https://doi.org/10.1016/j.jpubeco.2022.104604
Burgess R, Jedwab R, Miguel E, Morjaria A, Miquel G (2015) The value of democracy: evidence from road building in Kenya. Am Econ Rev 105(6):1817–1851
Capello M, Alvarado J, Santinelli Arenillas F (2020) ¿Qué provincias recibieron más transferencias discrecionales en los últimos 25 años? Foco fiscal, vol 48. IERAL (https://www.ieral.org/images_db/noticias_archivos/4304-Foco%20Fiscal.pdf)
Caselli F, Coleman W II (2013) On the theory of ethnic conflict. J Eur Econ Assoc 11:161–192
de Chaisemartin C, D’Haultfoeuille X (2020) Two-way fixed effects estimators with heterogeneous treatment effects. Am Econ Rev. https://doi.org/10.1257/aer.20181169
Chen X, Nordhaus W (2011) Using luminosity data as a proxy for economic. Stat Proc Natl Acad Sci USA 108(21):8589–8594
Ciaschi M (2021) Análisis distributivo utilizando información satelital. El caso de Argentina. Estud Econ 38(77):5–38
Comisión Económica para América Latina y el Caribe (2022) Panorama social en América Latina 2021. https://www.cepal.org/es/publicaciones/47718-panorama-social-america-latina-2021. Accessed March 2023
Conley T (1999) GMM estimation with cross sectional dependence. J Econom 92:1–45
Conley T, Molinari F (2007) Spatial correlation robust inference with errors in location or distance. J Econom 140:76–96. https://doi.org/10.1016/j.jeconom.2006.09.003
Cruzatti CJ, Bjørnskov C, Sáenz de Viteri Vázquez A (2021) Geography, development, and power: parliament leaders and local economies https://doi.org/10.2139/ssrn.3994438
De Luca G, Hodler R, Raschky PA, Valsecchi M (2018) Ethnic favoritism: an axiom of politics? J Dev Econ 132:115–129. https://doi.org/10.1016/j.jdeveco.2017.12.006
Do Q, Nguyen K, Tran A (2017) One mandarin benefits the whole clan: hometown favoritism in an authoritarian regime. Am Econ J Appl Econ 9(4):1–29
Doll C, Muller J, Elvidge C (2000) Nighttime imagery as a tool for global mapping of socioeconomic parameters and greenhouse gas emissions. Ambio 29(3):157–162
Dreher A, Fuchs A, Hodler R, Parks B, Raschky P, Tiernet M (2019) African leaders and the geography of China’s foreign assistance. J Dev Econ. https://doi.org/10.1016/j.jdeveco.2019.04.003
Ebener S, Murray C, Tandon A, Elvidge C (2005) From wealth to health: modelling the distribution of income per capita at the sub-national level using night-time light imagery. Int J Health Geogr 4(5):1–17
Elvidge C, Baugh K, Kihn E, Koehl H, Davis E, Davis C (1997) Relation between satellite observed visible near-infrared emissions, population, economic activity and electric power consumption. Int J Remote Sens 18(6):1373–1379
Elvidge C, Hobson V, Baugh K, Dietz J, Shimabukuro Y, Krug T, Novo E, Echavarria E (2001) DMSP-OLS estimation of tropical forest area impacted by surface fires in Romania, Brazil: 1995 versus 1998. Int J Remote Sens 24(14):2661–2673
Falchi F, Cinzano P, Duriscoe D, Kyba C, Elvidge C et al (2016) The new World atlas of artificial night sky brightness. Sci Adv 2:1–25
Ferraz C, Finan F (2011) Electoral accountability and corruption: evidence from the audits of local governments. Am Econ Rev 101(4):1274–1311
Fiva J, Halse A (2016) Local favoritism in at-large proportional representation systems. J Public Econ 143:15–26. https://doi.org/10.1016/j.jpubeco.2016.08.002
Gervasoni C (2010) A rentier theory of subnational regimes: fiscal federalism, democracy and authoritarianism in the Argentine provinces. World Polit 62(2):302–340. https://doi.org/10.1017/S0043887110000067
Gonschorek G (2021) Subnational favoritism in development grant allocations: empirical evidence from decentralized Indonesia. World Dev. https://doi.org/10.1016/j.worlddev.2020.105299
González F, Santos M (2020) Pobreza multidimensional urbana en Argentina. ¿Reducción de las disparidades entre el Norte Grande Argentino y Centro-Cuyo-Sur? (2003–2016). Cuad Econ 39(81):795–822
González F, Simes H (2021) Macroeconomic conditions during impressionable years and trust in institutions: evidence from Argentina. Work presented at IV Congreso de Economía del Norte Grande, Resistencia, November of 2021
González F, London S, Santos M (2021a) Disasters and economic growth: evidence for Argentina. Climate and development https://doi.org/10.1080/17565529.2021.1873724
González F, Santos M, Fernández J (2021b) ¿Discontinuidades o continuidades políticas? Explorando sus efectos sobre el desempeño económico: el caso de la intervención federal en Santiago del Estero. Working paper, vol 100. REDNIE (https://ideas.repec.org/p/aoz/wpaper/100.html)
González F, Cantero L, Szyszko P (2023) Favoritismo regional en Argentina. Working paper 11, Facultad de Ciencias Económicas-Universidad Nacional de Misiones. https://cyt.fce.unam.edu.ar/documentos-cyt/dt-010-favoritismo-regional-en-argentina/. Accessed June 2023
Henderson V, Storeygard A, Weil D (2012) Measuring economic growth from outer space. Am Econ Rev 102(2):994–1028
Hodler R, Raschky P (2014) Regional favoritism. Q J Econ 129(2):995–1033
Huang Z, Du X (2022) Hometown favoritism and land allocation: evidence from China. Land Use Policy. https://doi.org/10.1016/j.landusepol.2022.106431
Kung J, Zhou T (2017) Political elites and hometown favoritism in famine-stricken China. J Comp Econ 49(1):22–37. https://doi.org/10.1016/j.jce.2020.06.001
Mattos E, Politi R, Morata R (2021) Birthplace favoritism and the distribution of budget amendments in Brazil: evidence from non district elections. Eur J Polit Econ. https://doi.org/10.1016/j.ejpoleco.2020.101989
Moskovits C, Cao J (2012) Eficiencia del gasto público en las provincias argentinas. Explorando sus determinantes. Working paper, vol 119. FIEL (http://www.fiel.org/publicaciones/Documentos/DOC_TRAB_1352228989578.pdf)
Ning S, Zhang Q (2022) Hometown favoritism: effect of environmental governance of politicians returning home. Econ Model. https://doi.org/10.1016/j.econmod.2022.106070
NOAA (2014) DMSP-OLS nighttime lights time series version 4: average visible, stable lights, and cloud free coverage. https://ngdc.noaa.gov/eog/dmsp/downloadV4composites.html. Accessed August 2019
Pinkovskiy M, Sala-i-Martin X (2015) Lights, camera,…income! Estimating poverty using national accounts, survey means, and lights. Staff report, vol 669. Federal Reserve Bank, New York
Rezk E, Lafit G, Ricca V (2011) Transferencias discrecionales a los gobiernos subnacionales: un análisis para Argentina con datos de panel. In: Workshop del Instituto de Economía y Finanzas (https://www.eco.unc.edu.ar/files/ief/workshops/2011/17mayo11_Workshop_rezk_lafit_ricca.pdf)
Socioeconomic Data and Applications Cente (2017) Gridded population of the World v4. https://sedac.ciesin.columbia.edu/data/collection/gpw-v4#:~:text=Introduction,a%20continuous%20global%20raster%20surface. Accessed August 2022
Spiller P, Tommasi M (2011) Un país sin rumbo. ¿Cómo se hacen las políticas públicas en Argentina? In: Scartascini C, Spiller PT, Stein E, Tommasi M (eds) El juego político en América Latina. ¿Cómo se deciden las políticas públicas? Banco Interamericano de Desarrollo, in, pp 75–116
Sutton P, Costanza R (2002) Global estimates of market and non-market values derived from nighttime satellite imagery, land cover, and ecosystem service valuation. Ecol Econ 41:509–527
Vu TM, Yamada H (2021) Firms and regional favouritism. Econ Transit Inst Change 29:711–734
Wang C, Lu Y (2022) Regional favouritism and education development. Reg Stud Reg Sci 9(1):302–319. https://doi.org/10.1080/21681376.2022.2072762
Widmer P, Zurlinden N (2022) Ministers engage in favoritism too. J Public Econ. https://doi.org/10.1016/j.jpubeco.2022.104707
World Bank (2022) Development indicators database. https://data.worldbank.org/indicator/NY.GDP.DEFL.KD.ZG?end=2021&locations=AR&start=1991. Accessed July 2022
Author information
Authors and Affiliations
Contributions
All authors have equally contributed
Corresponding author
Ethics declarations
Conflict of interest
F.A.I. González, L.S. Cantero and P.A. Szyszko declare that they have no competing interests.
Additional information
Publisher’s Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Availability of data and material
All data is publicly available
Appendix
Appendix
Event Study Design Estimation for inequality (left) and economic activity (right). Note: Own elaboration based on de Chaisemartin and D’Haultfoeuille (2020). did_multiplegt is the STATA 16.1 package used for estimation. Shaded areas represent 95% confidence intervals
Rights and permissions
Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.
About this article
Cite this article
González, F.A.I., Cantero, L.S. & Szyszko, P.A. Inequality and economic activity under regional favoritism: evidence from Argentina. Rev Reg Res 43, 343–361 (2023). https://doi.org/10.1007/s10037-023-00195-4
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10037-023-00195-4