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Public Good Provision in Indian Rural Areas: The Returns to Collective Action by Microfinance Groups

World Bank Policy Research Working Paper No. 7397
2015
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Metric Options:   Counts1 Year3 Year

Metrics Details

  • Usage
    574
    • Abstract Views
      461
    • Downloads
      113
  • Ratings
    • Download Rank
      495,567

Paper Description

Self-help groups (SHGs) are the most common form of microfinance in India. The authors provide evidence that SHGs, composed of women only, undertake collective actions for the provision of public goods within village communities. Using a theoretical model, this paper shows that an elected official, whose aim is to maximize re-election chances, exerts higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods. This effect occurs although government and private contributions are assumed to be substitutes in the technology of providing public goods. Using first-hand data on SHGs in India, the paper tests the prediction of the model and shows that, in response to collective action by SHGs, local authorities tackle a larger variety of public issues, and are more likely to tackle issues of interest to SHGs. The findings highlight how the social behavior of SHGs can influence the governance of rural Indian communities.

Bibliographic Details

Paolo Casini; Lore Vandewalle; Zaki Wahhaj

Spatial and Local Economic Development; Regional Economic Development; Subnational Economic Development; Economic Development; Economic Growth; Technology Innovation; Industrial Economics; Economic Theory & Research; Technology Industry

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