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<p>Pro-urban bias in policy is often seen as a common phenomenon in the developing
world. Empirical reality though is much more varied. Many governments actively support
agricultural producers and rural citizens, even at early stages of development. In
addition, the binary distinction between urban and rural bias in policy aggregates
over important sub-national variation in the distributive impact of government policies.
This dissertation extends the research frontier by analyzing the political roots underlying
spatial bias in policy using new theoretical and empirical approaches. First, this
dissertation develops a theory that identifies conditions under which politicians
will institute pro-urban or pro-rural policies, by considering the threat of a rural
insurgency. Second, I argue that elections in rural majority societies can empower
citizens in the rural periphery. Competitive elections and high rural turnout induce
governments to supply favorable policies to the rural sector as a whole and salient
regions in particular. To test the effect of the threat of rural violence, I use new
cross-national data on net taxation in the agricultural sector. Data on fiscal transfers
and the sub-national effects of agricultural pricing policies in Indonesian districts
provide additional evidence for the first hypothesis. To test the effect of elections
on urban bias, I exploit a natural experiment from the Indonesian context. Last, I
analyze the proliferation of districts in Indonesia from 2001 to 2009, with important
implications for future fiscal transfers, and show the process is largely driven by
local elite competition within and between districts.</p>
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