Elections and Economic Policy in Developing Countries
AbstractThis paper explores the impact of elections on economic policies and governance in developing countries. We distinguish between a structural effect, which increases accountability, and a cyclical effect which may be disruptive. Since the effects are offsetting, neither can be analyzed in isolation. We implement an econometric analysis on more than 80 developing countries using positive changes in the Country Policy and Institutional Assessment of the World Bank and the International Country Risk Guide as signaling improvements in economic policy and governance. We find that both structural and cyclical effects matter. The cyclical effect suggests that mid-term is the best moment for policy change. We investigate the structural effect by comparing different frequencies of elections. Except at the extremes, a higher frequency of elections improves both policy and governance net of any cyclical effect. The important exception to this benign net effect is if the electoral process is badly conducted. Badly conducted elections have no structural efficacy for policy improvement. A reasonable interpretation of our results is that honest elections increase accountability and thereby discipline governments to improve economic policy and governance, but that if candidates can win by fraud this chain is broken.
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Bibliographic InfoPaper provided by Centre for the Study of African Economies, University of Oxford in its series CSAE Working Paper Series with number 2008-34.
Date of creation: 2008
Date of revision:
Other versions of this item:
- Lisa Chauvet & Paul Collier, 2009. "Elections and economic policy in developing countries," Economic Policy, CEPR & CES & MSH, vol. 24, pages 509-550, 07.
- Chauvet, Lisa & Collier, Paul, 2009. "Elections and Economic Policy in Developing Countries," Economics Papers from University Paris Dauphine 123456789/4315, Paris Dauphine University.
- Paul Collier & Lisa Chauvet, 2008. "Elections and Economic Policy in Developing Countries," Economics Series Working Papers WPS/2008-34, University of Oxford, Department of Economics.
- Lisa Chauvet & Paul Collier, 2008. "Elections and Economic Policy in Developing Countries," Working Papers DT/2008/11, DIAL (Développement, Institutions et Mondialisation).
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
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