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Distributive Politics, Nature Of Government Spending And Economic Growth In A Low Income Democracy

Author

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  • Sasmal, Joydeb

    (K.K. Das College, University of Calcutta, India)

Abstract

In this paper we analyze how the government in a democratic setup of the developing world manipulates the fiscal instruments to maximize its political gain so that it can retain power. The government and the voters in low income countries are generally selfish and myopic in the sense that the electorates prefer to get direct and immediate benefits from the government while the government, in turn, tries to seek majority support in the election, by adopting short term and distributive policies instead of going for long term growth. Using the theoretical structure of the existing literature, and making modifications therein, this study demonstrates that the optimal tax rate, public expenditure shares and growth rate are determined in terms of technological and behavioral parameters. The simulation results show that if political gain from distributive policies is high, the government will allocate a greater share of the fund for distributive purposes adversely affecting economic growth.

Suggested Citation

  • Sasmal, Joydeb, 2011. "Distributive Politics, Nature Of Government Spending And Economic Growth In A Low Income Democracy," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 16(30), pages 31-49.
    • Handle: RePEc:ris:joefas:0028
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    Citations

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    Cited by:

    1. Sugata Marjit & Ritwik Sasmal & Joydeb Sasmal, 2020. "Composition of public expenditure and growth of per capita income in Indian states: a political perspective," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 22(1), pages 1-17, June.
    2. Joydeb Sasmal & Ritwik Sasmal, 2020. "Public Debt, Economic Growth and Fiscal Balance: Alternative Measures of Sustainability in the Indian Context," Global Business Review, International Management Institute, vol. 21(3), pages 780-799, June.
    3. Mohammad Reza Farzanegan & Sajjad Faraji Dizaji, 2014. "Political Institutions and Government Spending Behavior in Iran," MAGKS Papers on Economics 201403, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    4. Joydeb Sasmal & Ritwik Sasmal, 2017. "Government Spending With Public Debt, Economic Growth And Fiscal Balance: Evidences From India," Proceedings of International Academic Conferences 5908111, International Institute of Social and Economic Sciences.

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