Political Competition and Human Development: Evidence from the Indian States

Recently, it has been argued that political competition may have similar effects on economic performance as it does on market competition. This study empirically examines this proposition by linking political competition with the Human Development Index (HDI) of the Indian states. The findings suggest that politically-competitive governments perform well along the HDI. A more detailed analysis also shows that rural India benefits most from the intense political competition compared to urban India. We also found that if the same government rules a state for a relatively long period, it helps the state to achieve a higher HDI score. Increasing voter participation is found to be positively associated with HDI score, but this finding is confined to the sample of major Indian states. Increasing public spending on developmental activities is also found to have a positive and significant effect on HDI performance.