Party Linkages and Economic Policy: An Examination of Indira Gandhi’s India

We know from observation that some democracies intervene deeply in their domestic economies while others adopt a more laissez faire approach. Can we explain these differences solely with ideology, or are other political influences also at work? I argue in this paper that elected leaders sometimes opt for hefty economic regulation purely to generate sources of patronage that can be used to maintain their political positions. Leaders are most tempted to take this approach, I contend, when their political parties are not stably linked to sources of electoral support. Unstably linked governing parties will tend to have very short time horizons, focusing on the immediate objective of avoiding massive vote losses in the next election. As a result, they will be less concerned with the potential future damage that a patronage-based policy may inflict on the national economy. I find support for this argument with a close examination of Indian economic policy under Indira Gandhi. Prime Minister Gandhi, I contend, increased the Indian state’s control over trade, industrial production, and credit allocation just as the Congress Party’s linkages to the electorate were destabilizing

Decentralization, Governance, and the Structure of Local Political Institutions: Lessons for Reform?

Many governments are devolving power to elected local councils, hoping to improve service delivery and citizen representation by bringing officials closer to the people. While these decentralization reforms hold the promise of improved governance, they also present national and sub-national leaders with a complex array of options about how to structure newly empowered local political institutions. This article draws on cross-national experience and the latest research to identify the trade-offs inherent in structuring local political institutions. The study’s specific interest is in the impact of strong, locally elected councils on governance and representation. Proceeding from an empirical basis that competitive elections are vital for the legitimacy and efficiency of local political institutions, the analysis first questions the impact of four institutional features – central versus local control, local executive versus local council authority, local council structure, and the role of parties – on service provision and fiscal solvency. The article’s second section analyses the impact of decentralization on political representation, with a particular focus on the role of institutional design in combating the threat of extremist parties. A final section summarizes empirical findings and advances some policy-relevant conclusions

The Efficiency of Institutions: Political Determinants of Oil Consumption in Democracies

Oil consumption has varied significantly among democracies, but scholars have not systematically studied the political determinants of this variation. We examine the effects of political institutions on a democratic country’s propensity to consume oil. We argue that, other things being equal, more centralized national political institutions facilitate the adoption of policies that lower oil intensity. Our primary focus is on the impact of veto players, but we also consider electoral systems, party organization, and legislative-executive relations separately. We evaluate our hypotheses with a TSCS analysis of all democracies since the first oil shock in 1973 (contingent on data availability), and we make use of an error correction model to separate short- and long-term effects and to correct for the non-stationarity of the dependent variable. We find strong support for the hypothesized link between numerous veto players and slower reductions in oil intensity as well as weaker support for the influence of party decentralization

Electoral Accountability and Fiscal Federalism:The Case of Peru

Accountability is at the heart of the democratic enterprise. One commonly touted benefit of decentralization is that it promotes this accountability by allowing sub-national governments to target fiscal policy more precisely to the varying preferences of people in different locales. But if accountability is really functioning as it should, then citizens should use the ballot box to reward and punish local officials for their concrete policy behavior. In other words, we should not only be able to link the presence of decentralization with improvements in local public goods, but we should also be able to connect voting behavior in specific locales with the competence of local politicians. Because of the empirical challenges, few scholars have attempted test this prediction directly. Using government information as well as data coded for this project, we examine the case of Peru, assessing how measures of local government success affect the probability of reelection and recall. We find that, when Mayors manage their waste collection and education portfolios more effectively, they are more likely to win office in subsequent elections. They are also less likely to be removed in recall votes. More than that, when Mayors spend more overall, and especially when they spend more on capital projects, we find that their probability of reelection improves, and their risk of recall declines. Overall, our results show clearly that Peru’s citizens use their votes rationally to reward and punish locally elected politicians. This gives substance and support to the notion that, at least under certain circumstances, accountability can function well under decentralized government

Rethinking the Political Economy of Decentralization: How Elections and Parties Shape the Provision of Local Public Goods

Decentralization is among the most important global trends of the new century, yet there is still no consensus on how to design political institutions to realize its benefits. In this paper, we investigate the political conditions under which decentralization will improve the delivery of public goods. We begin by incorporating insights from political science and economics into a rigorous and formal extension of the “decentralization theorem”. Our extension assumes inter-jurisdictional spillovers and suggests that the interaction of democratic decentralization (popularly elected sub-national governments) and party centralization (the power of national party leaders over subnational office-seekers) will produce the best outcomes for public service delivery. To test this argument empirically, we make use of a new dataset of sub-national political institutions created for this project. Our analyses, which allow us to examine educational outcomes in more than 125 countries across more than 25 years, provide support for our theoretical expectations

The Politics of Fiscal Federalism: Building a Stronger Decentralization Theorem

We explore how party structures can condition the benefits of decentralization in modern democracies. In particular, we study the interaction of two political institutions: democratic (de)centralization (whether a country has fiscally autonomous and elected local governments) and party (non)integration (whether power over local party leaders flows upwards through party institutions, which we model using control over candidate selection). We incorporate these institutions into our strong decentralization theorem, which expands on Oates (1972) to examine when the decentralized provision of public services will dominate centralized provision even in the presence of inter-jurisdictional spillovers. Our findings suggest that, when externalities are present, democratic decentralization will be beneficial only when parties are integrated. In countries with non-integrated parties, we find that the participation rules of primaries have implications for the expected gains from democratic decentralization. Under blanket primaries, Oates’ conventional decentralization theorem holds but our strong decentralization theorem does not. By contrast, when primaries are closed, not even Oates’ conventional decentralization theorem holds

Economic Liberalism in Illiberal Regimes: Authoritarian Variation and the Political Economy of Trade

Over the last few decades, a vast literature has emerged examining the relationship between democratic political institutions and trade policy outcomes. While this literature has added significantly to our knowledge, it has effectively ignored policymaking in dozens of important states—those that remain autocratic. This paper fills that hole by exploring the effects of authoritarian variation on national trade policies. Our contention is that more institutionalized authoritarian regimes will tend to adopt more open trade policies. This relationship should hold, we argue, for two distinct reasons. First, we argue that autocratic regimes with larger “selectorates” should have greater incentives to provide public rather than private goods. As a result, we expect that multiparty, and to a lesser extent single-party, autocracies will tend to prefer more open trade policies than non-party (often personalistic) dictatorships, monarchies, and military juntas. Second, we contend that more stable autocratic regimes will have longer time horizons and therefore greater incentives to adopt policies, such as trade openness, that may strengthen long-run economic performance. We find strong support for these arguments using several cross-national time-series models of all autocracies ranging from 1962 to 2007 (contingent on data availability)