Ideas to Action:

Independent research for global prosperity

Research Seminar Series (RSS)

Do Unequal Communities Invest in the Poorest? Local Inequality and Project Choice at a Social Investment Fund in Ecuador

Thursday, October 20, 2005 - 12:00pm to 1:30pm


Center for Global Development
1800 Massachusetts Ave. NW, Third Floor
12:00 noon–1:30 p.m.

Francisco H.G. Ferreira, Pontifícia Universidade Católica, Rio de Janeiro and the World Bank, will present Local Inequality and Project Choice in a Social Investment Fund. Garance Genicot, Assistant Professor, Department of Economics, Georgetown University, will serve as the discussant. 

A light lunch will be served

Please RSVP by October 19 to events@cgdev.org

ABSTRACT: In the context of Social Funds, which form a large part of the World Bank’s community-driven development (CDD) approach, the main decisions for a community are whether to apply for a project and what type of project to apply for. Despite numerous recent evaluations of Social Investment Funds in various countries around the world, quantitative evidence on the local determinants of project choice remains scant. In this paper, using data on Ecuador’s Social Investment Funds (FISE), we examine the relationship between the type of project chosen by the community and its characteristics, with a particular interest in the local distribution of income. Consistent with the predictions of our model, we find that communities with higher levels of inequality are less likely to choose projects that provide excludable goods for the poor, such as latrines. The measure of income inequality used matters greatly in the empirical analysis. Furthermore, we find that the poverty headcount, population size, and the level of political support for the incumbent party at the local level are also important determinants of project choice. (This paper is jointly authored with M. Caridad Araujo, Peter Lanjouw, and Berk Özler.)

*The Massachusetts Avenue Development Seminar (MADS) series is an effort by the Center for Global Development and The Paul H Nitze School of Advanced International Studies to take advantage of the incredible concentration of great international development scholars in the Metro Washington, DC area. The series seeks to bring together members of this community and improve communication between them.