The political determinants of public infrastructure investment in Middle Income Countries : the visibility and targetability of white elephants

Abstract

Middle Income Countries are often stuck in a trap, due to the political distortions that drive their allocation of investment. This dissertation explores these political determinants of public infrastructure investment in Middle-Income Countries [MICs], focusing on how political competition drives the allocation of investment. I argue that insecure incumbents in MICs, prioritize investments in economic infrastructure over social infrastructure due to their higher visibility and targetability, which make them politically valuable. Theoretically, when accountability is low, this misallocation can lead to inefficient, wasteful investments and "White Elephants" that hinder development. By adopting a political economy approach, the dissertation disaggregates investment categories by function to examine the visibility and targetability mechanisms and their distortionary effects on resource allocation. Using empirical analysis of MICs and a detailed case study, this dissertation shows how low horizontal and vertical accountability mean that politics can distort the allocation of investment, resulting in overinvestment in potentially wasteful-albeit politically valuable- economic infrastructure at the expense of -often-more necessary social investments. The findings contribute to understanding, not only why MICs overinvest in economic infrastructure, but also why investment in MICs often fails to translate into growth, providing critical insights into the political dynamics behind resource misallocation and its implications for escaping the MIT.Middle Income Countries are often stuck in a trap, due to the political distortions that drive their allocation of investment. This dissertation explores these political determinants of public infrastructure investment in Middle-Income Countries [MICs], focusing on how political competition drives the allocation of investment. I argue that insecure incumbents in MICs, prioritize investments in economic infrastructure over social infrastructure due to their higher visibility and targetability, which make them politically valuable. Theoretically, when accountability is low, this misallocation can lead to inefficient, wasteful investments and "White Elephants" that hinder development. By adopting a political economy approach, the dissertation disaggregates investment categories by function to examine the visibility and targetability mechanisms and their distortionary effects on resource allocation. Using empirical analysis of MICs and a detailed case study, this dissertation shows how low horizontal and vertical accountability mean that politics can distort the allocation of investment, resulting in overinvestment in potentially wasteful-albeit politically valuable- economic infrastructure at the expense of -often-more necessary social investments. The findings contribute to understanding, not only why MICs overinvest in economic infrastructure, but also why investment in MICs often fails to translate into growth, providing critical insights into the political dynamics behind resource misallocation and its implications for escaping the MIT