The results in Tables 5 should be interpreted with caution. As I argue above, if FONCODES expenditures between December 1991 and October 1993 had an effect on the outcome of the 1993 referendum, any regression of expenditures after October 1993 which includes the results of the referendum as an explanatory variable is likely to be contaminated by simultaneity bias. Bearing this caveat in mind, however, the results in Table 5 suggest that _changes_ in the vote between 1993 and 1990, rather than simply the level of government support in the 1993 referendum, influenced the distribution of FONCODES expenditures after 1993. The coefficients on the measures of marginal vote and core support are jointly insignificant at the 5% level in all of the specifications. By contrast, the coefficient on the change in the pro-Fujimori vote is significant at the 1% level or better in two of the three specifications in Table 5. Roberts and Arce argue that Fujimori attempted to "recapture the loyalty of the popular sectors" by picking up the pace of poverty-alleviation programmes after 1993. The results in Table 5 suggest that social expenditures channeled through FONCODES were used for such a buy-back strategy in a very focussed way: FONCODES projects were specifically directed at provinces which had supported Fujimori in 1990, but had abandoned him in 1993.

Tables 5 shows that poverty continued to be an important determinant of per capita expenditures: the coefficient on the (log of the) FONCODES index is positive, large, and highly significant in all specifications. Rurality is also associated with significantly higher per capita expenditures (columns (ii), (v)).<sup>26</sup> This finding does not conform with an extensive literature in the political economy of development which argues that vocal and organized urban constituencies in LDCs siphon off the bulk of public funds (Bates 1981, Nelson 1992, Graham 1997). FONCODES expenditures in the November 1993-March 1995 period favored rural areas, perhaps because there were other social programs in Peru at the time which were directed at urban populations.<sup>27</sup> What, finally, can we say about the magnitude of these effects? Table 6 summarizes the effect of one-standard deviation changes in the log of the FONCODES index and the measure of the change in proFujimori support on the distribution of per capita FONCODES expenditures. The results suggest that the political influence on the distribution of FONCODES expenditures continued to be large: a one standard deviation decrease in the pro-Fujimori vote resulted in anything between a 16% and a 34% increase in per capita expenditures. Meanwhile, the effect of poverty on the distribution of FONCODES expenditures appears to have increased after the referendum. This result is consistent with those reported elsewhere

> 2 6 Interpretation of the coefficients on the proportion rural and population size in columns (iii), (vi) and (ix) is not straightforward because of the high degree of collinearity between these variables and all of the additional controls. The same caveat obviously applies to column (iii) in Table 3 as well.

> 27 These included two housing programs (ENACE, Banco de Materiales); aprogram for the construction of electricity, water and sanitation systems (UTE-FONAVI); a small welfare program for destitute families (INABJIF); and a school construction program which spent mainly on urban schools (INFES) (see World Bank 1996).

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