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A wait‐and‐see approach to investments: Do elections play a role?

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  • Daniel A. Kanyam

Abstract

Unlike previous studies on electoral investment cycle—the tendency for firms to reduce investment expenditure during an election year relative to nonelection years—that have primarily focused on developed countries, this study documents cycles in private investments in relation to the timing of national elections across a broader set of African countries. The estimation results indicate that during election years, private investment decreases by an average of 16% relative to nonelection years. The results also reveal that private investment falls in the year leading up to an election and increases in the immediate year after an election, consistent with the view that electoral uncertainty deters investments. These findings suggest that electoral investment cycles apply strongly to African countries.

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  • Daniel A. Kanyam, 2020. "A wait‐and‐see approach to investments: Do elections play a role?," Review of Development Economics, Wiley Blackwell, vol. 24(1), pages 106-124, February.
    • Handle: RePEc:bla:rdevec:v:24:y:2020:i:1:p:106-124
    DOI: 10.1111/rode.12632
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    Cited by:

    1. Canes-Wrone, Brandice & Ponce de Leon, Christian & Thieme, Sebastian, 2022. "Electoral Cycles, Investment, and Institutional Constraints in Developing Democracies," IAST Working Papers 22-129, Institute for Advanced Study in Toulouse (IAST).

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