CEPAL Review

Cepal Review is the leading journal for the study of economic and social development issues in Latin America and the Caribbean. Edited by the Economic Commission for Latin America, each issue focuses on economic trends, industrialization, income distribution, technological development and monetary systems, as well as the implementation of economic reform and transfer of technology. Written in English and Spanish (Revista de la Cepal), each tri-annual issue offers approximately 12 studies and essays undertaken by authoritative experts or gathered from conference proceedings.

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The political economy of regional grants in Peru

This paper explores the regional allocation pattern of general resources (recursos ordinarios) in Peru, which are distributed to regional governments through a discretionary grant by the national government. We estimate an empirical model based on a panel of annual data between 2004 and 2010. Although national transfers are significantly biased towards regions where the national government received the lowest electoral support, the data suggest that this effect is strongest at the beginning of the administration’s period in office. In the long run, however, opposition regions appear to host more volatile constituencies, which is compatible with the swing-voter hypothesis. Interestingly, regions that strongly supported the president receive the fewest benefits. Finally, the role of regional conflicts, the effect of lobbying by organized regionally based civil groups and the size of the regional constituency, among others variables, are statistically significant in the estimations.

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