Politics and Investment: Examining the Territorial Allocation of Public Investment in Greece

Abstract

This paper discusses how electoral politics shapes the regional allocation of public investment expenditures per capita in Greece. Using regional public investment data for 10 political periods (1975-2009), combined with electoral data by constituency, a model is proposed which captures the influence of politics on the regional distribution of public investment expenditures. The results of the analysis point to a strong relationship between electoral results and regional public investment spending. Greek governing parties have tended to reward those constituencies returning them to office. Moreover, an increase in both the absolute and relative electoral returns of the governing party in a region has traditionally been followed by greater public investment per capita in that region. Regions where the governing party (whether Liberal or Socialist) has held a monopoly of seats have been the greatest beneficiaries of this type of pork-barrel politics.

Keywords: elections, Greece, political geography, pork-barrel politics, public investment

JEL Classification: H50, H77, R12, R58, Z18