Regional inequality and public policies: executive transfers in federal contexts

Abstract

This paper analyzes the distribution of road funds from the Argentine national government to the provinces between 2008 and 2023. It assesses whether these transfers have been used as tools to compensate for regional disparities or whether they have responded to political variables. Fixed-effects panel models are used to estimate the impact of independent variables on the allocation of road funds. The results show that economic inequality and the structural power of subnational governments have no significant impact on the allocation of funds. In contrast, political variables, such as the partisan affinity between the governor and the president and the percentage of votes for the national government in the province, are significant and of high magnitude. This indicates that the distribution of funds responds to political considerations, which limits the use of this tool as a territorial development policy.