The Political Economy of Consolidating Democracies

Paper Session

Saturday, Jan. 7, 2017 10:15 AM – 12:15 PM

Swissotel Chicago, Zurich C
Hosted By: American Economic Association
  • Chair: Giorgio Chiovelli, London Business School

Social Origins of Dictatorships: Elite Networks and Political Transitions in Haiti

Suresh Naidu
,
Columbia University
James A. Robinson
,
University of Chicago
Lauren E. Young
,
Columbia University

Abstract

Existing theories of coups against democracy emphasize that elite incentives to mount a coup depend on the threat that democracy represents to them and what they stand to gain from dictatorship. But holding interests constant, some potential plotters, by the nature of their social networks, have much more influence over whether or not a coup succeeds. We develop a model of elite social networks and show that coup participation of an elite is increasing in their network centrality and results in rents during a dictatorship. We empirically explore the model using an original dataset of Haitian elite social networks which we linked to firm-level data on importing firms. We show that highly central families are more likely to participate in the 1991 coup against the democratic Aristide government. We then find that the retail prices of the staple goods imported by coup participators differentially increase during subsequent periods of non-democracy. Finally, we find that urban children born during periods of non-democracy are more likely to experience adverse health outcomes.

Breaking Clientelism or Rewarding Incumbents? Evidence From an Urban Titling Program in Mexico

Horacio Larreguy
,
Harvard University
John Marshall
,
Harvard University
Laura Trucco
,
New York University

Abstract

Clientelism is common in developing countries, and often detrimentally affects political accountability and public good provision. However, little is known about how clientelistic ties can be broken because policy reforms that could reduce voter dependence on incumbents for special favors may also cause voters to reward the reform's architects. Exploiting Mexico's federal structure and changes in incumbency over time, we separate these countervailing effects in the context of a federal land titling program that reached nearly 2.16 million urban households over 35 years. Our results demonstrate that programmatic reforms can both reduce clientelism while also reward incumbents for their policies.

Local Government Proliferation, Diversity, and Conflict

Samuel Bazzi
,
Boston University
Matthew Gudgeon
,
Boston University

Abstract

The redrawing of administrative boundaries and creation of new local governments are pervasive features of decentralization across the world. This redistricting process constitutes a dramatic shift in the locus of politics and often causes substantial changes in two widely debated sources of conflict: diversity and contestable public resources. Using new geospatial data on violence and the plausibly exogenous timing of district creation in Indonesia, we show that allowing for redistricting along group lines can reduce conflict. However, these reductions are undone and even reversed if the newly defined electorates are ethnically polarized, particularly in areas that receive an entirely new seat of government. We link changes in the salience of group cleavages to the violent contestation of political control by identifying new cycles of electoral violence and ethnic favoritism. Our findings illustrate some unintended consequences of redistricting in diverse settings and offer novel insight into the instrumental role of diversity in shaping conflict.

The Non-Democratic Roots of Elite Capture: Evidence from Soeharto Mayors in Indonesia

Monica Martinez-Bravo
,
CEMFI
Priya Mukherjee
,
College of William and Mary
Andreas Stegmann
,
CEMFI

Abstract

Democracies widely differ on the extent to which powerful elites and interest groups retain influence over politics. While a large literature argues that elite capture is rooted in a country's history, our understanding of the determinants of elite persistence is limited. In this paper, we show that the way in which democratic transitions unfold is a key determinant of the extent of elite capture. We exploit a natural experiment that occurred during the Indonesian transition: Soeharto-regime mayors were allowed to finish their terms before being replaced by new leaders. Since mayors' political cycles were not synchronized, this event generated exogenous variation in how long old-regime mayors remained in their position during the democratic transition. Districts with longer exposure to old-regime mayors experience worse governance outcomes, higher elite persistence, and lower political competition in the medium-run. The results suggest that slower transitions towards democracy allow the old-regime elites to capture democracy.

Ethnic Favoritism in Democracy: The Political Economy of Land and Labor in South Africa

Francesco Amodio
,
McGill University
Giorgio Chiovelli
,
London Business School

Abstract

This paper studies the extent and forms through which ethnic favoritism takes place in emerging democracies. Democracy brings about constraints on the executive, limiting the discretionary power of political leaders in allocating public goods. Yet, individuals connected to politicians may still enjoy comparative advantages on the markets for private goods. We investigate this issue in South Africa right after democratization. We combine data on electoral outcomes at the local municipality level with census data, and test for whether the labor market outcomes of individuals belonging to different ethnicities change differentially and discontinuously with the identity of the ruling party. Comparing Zulus with non-Zulus across municipalities, we find the former to be significantly and discontinuously less likely to be unemployed when the Zulu-based Inkatha Freedom Party (IFP) reaches the majority of the votes. Zulus are significantly more likely to be employed in agriculture. We argue that this is the outcome of strategic interactions between the IFP and traditional Zulu chief leaders, where the latter are given the power to allocate land. Suggestive evidence from survey data supports this hypothesis. A macro model featuring ethnic-specific distortions in land access is capable of reconciling the empirical facts, and allows calculating the welfare consequences of ethnic favoritism.
JEL Classifications
  • O1 - Economic Development
  • P1 - Capitalist Systems