Seminar

Steven Poelhekke: Priority roads. The Political Economy of Connecting Mines Versus Cities

How does a change in political institutions affect infrastructure investment decisions? We answer this question empirically by focusing on West Africa, a region which inherited comparatively few paved roads from the colonial period in the 1960s and has paved only a limited amount of kilometers since then. Merging historical data of roads, cities, mines and ports, we construct two sets of counterfactual networks, representing a social planner's choice to either first connect the cities or to link mines to ports.

Our hypothesis is that autocracies that are sensitive to rent seeking would give priority to connecting mines. Comparing the counterfactuals to the real road network, we find that democracies tend to connect cities to cities, whereas autocracies tend to connect mines to ports. Controlling for total road length, mine discoveries, foreign aid, FDI and wars, a change from autocracy to democracy is correlated with a 47% increase in the road network connecting cities instead of mines in the following years.