Development projects and policies were initially aimed at correcting market failures: bridges and power plants provided public goods; import tariffs protected infant industries; free, publicly provided health and education services captured the externalities associated with human capital. Yet, these projects and policies created a set of “government failures.” Thanks to free or subsidized power and water, Africa’s infrastructure suffered from inadequate maintenance and corruption. The Middle East was rapidly running out of water. Protection generated monopolies that undermined employment and exports. While access increased, the quality of health and education services in India was extremely poor, partly due to high absentee rates among doctors and teachers.
But government failures are much harder to correct because they are the result of a political equilibrium. Free or subsidized water and electricity enable politicians, who allocate the subsidy to the utilities, to ensure that these services go to people who vote for them. Protected industries are sometimes owned by members of the President’s family. In parts of India, teachers run the political campaigns of the local politicians. Standard approaches, such as advising governments about reform, are unlikely to dislodge these political equilibria. However, in light of the increase in competitive elections at national and local levels, and recent research on how information and transparency promote citizen engagement, informing the public—especially poor people—could enable them to hold politicians accountable and get what is their due.
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