Regional Favoritism and Development

Why are some countries perpetually trapped in poverty while others develop and make the leap? An influential literature in political economics suggests that an important cause of under-development is the practice of choosing sub-optimal policies that lead to severe economic distortions. One prominent example of such potentially inefficient policy is regional favoritism -- the distortion of policies by the government to the benefit of selected regions or groups at the expense of the country as a whole. This project studies the effects of favoritism on individuals and firms in a large set of developing countries. Using this micro-economic evidence, the project then asks why governments engage in such suboptimal policies.

This project is financed by the DFG, for further information see
https://gepris.dfg.de/gepris/projekt/423358188