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Elections and Economic Policy in Developing Countries

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  • Chauvet, Lisa
  • Collier, Paul

Abstract

This 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 Info

Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/4315.

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Date of creation: 2009
Date of revision:
Publication status: Published in Economic Policy, 2009, Vol. 24, no. 59. pp. 509-550.Length: 41 pages
Handle: RePEc:dau:papers:123456789/4315

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Web page: http://www.dauphine.fr/en/welcome.html
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Related research

Keywords: developing countries; economic policy; Elections; pays en développement; politique économique;

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  1. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August.
  2. Block, Steven A., 2002. "Political business cycles, democratization, and economic reform: the case of Africa," Journal of Development Economics, Elsevier, vol. 67(1), pages 205-228, February.
  3. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  4. Paul Collier & Dominic Rohner, 2008. "Democracy, Development, and Conflict," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 531-540, 04-05.
  5. Sevestre, P. & Trognon, A., 1985. "A note on autoregressive error components models," Journal of Econometrics, Elsevier, vol. 28(2), pages 231-245, May.
  6. Pedro C. Vicente, 2007. "Is Vote Buying Effective? Evidence from a Randomized Experiment in West Africa," Economics Series Working Papers 318, University of Oxford, Department of Economics.
  7. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  8. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
  9. Shi, Min & Svensson, Jakob, 2006. "Political budget cycles: Do they differ across countries and why?," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1367-1389, September.
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Citations

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Cited by:
  1. Ehrhart, H., 2013. "Elections and the structure of taxation in developing countries," Working papers 419, Banque de France.
  2. Armey, Laura E. & McNab, Robert M., 2012. "Democratization and civil war," MPRA Paper 42460, University Library of Munich, Germany.
  3. Paul Collier & Anke Hoeffler, 2009. "Democracy's Achilles Heel or, How to Win an Election without Really Trying," Economics Series Working Papers CSAE WPS/2009-08, University of Oxford, Department of Economics.
  4. Stefan Dercon & Roxana Gutierrez-Romero, 2010. "Triggers and Characteristics of the 2007 Kenyan Electoral Violence," Economics Series Working Papers CSAE WPS/2010-12, University of Oxford, Department of Economics.
  5. Paul Collier & Pedro Vicente, 2012. "Violence, bribery, and fraud: the political economy of elections in Sub-Saharan Africa," Public Choice, Springer, vol. 153(1), pages 117-147, October.
  6. Paul Collier & Anke Hoeffler, 2010. "Do Elections Matter for Economic Performance," Economics Series Working Papers CSAE WPS/2010-35, University of Oxford, Department of Economics.

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