Wednesday, March 6, 2013

Does Political Competition Influence Human Development? Evidence from the Indian States

NIPFP Working Paper 118

Bharatee Bhushan Dash and Sacchidananda Mukherjee
February 2013


Recently, it has been argued that political competition may have similar effects on economic performance as market competition. This study empirically examines this proposition by linking political competition with the Human Development Index (HDI) of the Indian states. The findings suggest that politically competitive governments perform well along the HDI. A more detailed analysis also shows that the rural India benefits the most from the intense political competition as compared to urban India. We also found that if the same government rules a state for a relatively longer period, it helps the state in achieving higher HDI score. Increasing voter participation found to be positively associated with HDI score, but this finding is confined to the sample of major Indian states only. Increasing public spending on developmental activities is also found to have a positive and significant effect on HDI performance. These findings are robust to various forms of sensitivity analyses.