Political Economy of Grant Allocations: The Case of Federal Highway Demonstration Grants

Abstract

This article examines the political economy of U.S. federal highway demonstration grant allocations. Demonstration grants are a rapidly growing segment of federal highway grants directly earmarked for a congressional district by Congress, unlike the majority of highway grants where Congress determines a formula and allocates funds accordingly to states. Our empirical analysis, considering the period 1983-2003, suggests that a state's ability to attract demonstration project grants is positively influenced by its contributions to the highway trust fund and political variables, and it is not affected by the formula highway aid and vehicle miles traveled in a state. Copyright 2008, Oxford University Press.