By reducing trade costs and promoting economic specialization across regions, transportation infrastructure is a determining factor of growth. Yet, developing countries are characterized by infrastructure underdevelopment, the general lack of funding being often mentioned as the main reason for it. Then, even when such investments are realized, the welfare gains associated to them might be captured by political elites that are strong enough to influence their allocation across space. We study this issue by investigating the political economy of road placement in Kenya, an African country where politicians are said to favour individuals from their region of origin or who share their ethnicity. Combining district-level panel data on road building with historical data on the ethnicity and district of birth of political leaders, we show that presidents disproportionately invest in their district of birth and those regions where their ethnicity is dominant. It also seems that the second most powerful ethnic group in the cabinet and the district of birth of the public works minister receive more paved roads. In the end, a large share of road investments over the period can be explained by political appointments, which denotes massive and well-entrenched ethno-favoritism in Kenyan politics.
Public Economics UK 10 (PEUK 10), University of Warwick, 28 May 2010. 36 pp.