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Elections and Economic Policy in Developing Countries

  • Paul Collier
  • Lisa Chauvet

This paper investigates whether elections in developing countries have improved economic policies and economic governance. Both casual empiricism and casual theorizing suggest that they have done so. As contested elections have become more common since the 1990s, the policy ratings from the World Bank and the International Country Risk Guide have both improved markedly. These improvements accord with the fundamental notion that elections discipline governments into good performance. Yet this view from on high often collides with the actual experience of individual elections. The Kenyan election of December 2007 triggered a catastrophic implosion of the society, polarizing it on ethnic lines. To date, the legacy of that election is a policy paralysis: for example, the number of government ministers has been doubled with a resulting loss of policy coherence. In Zimbabwe the prospect of contested elections in 2002 and 2008 clearly failed to discipline President Mugabe into adopting good economic policies: he chose hyperinflation, using the revenues to finance patronage. The most celebrated economic reform episode in Africa is Nigeria 2003-6, when a group of technocrats led by Ngozi Nkonjo-Iweala as Minister of Finance turned the economy around. This episode was ushered in by the replacement of a military dictator, General Abacha, with an elected president, Obasanjo, suggesting that elections indeed improved government performance. However, reform only began in Obasanjo’s second and final term, when he no longer faced the discipline of an election. He told Nkonjo-Iweala that the window for reform was only three years, not the full four years of his term: as he said, ‘the last year will be politics’.2 Indeed, that Nigeria failed to harness the first oil boom was primarily the responsibility of a democratic government, elected in 1978. That government adopted very poor economic policies, including borrowing heavily in order to finance public consumption; it was also famou

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2008-34.

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Date of creation: 01 Oct 2008
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Handle: RePEc:oxf:wpaper:wps/2008-34
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  1. 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.
  2. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  3. 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.
  4. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August.
  5. 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.
  6. Alesina, Alberto & La Ferrara, Eliana, 2005. "Ethnic Diversity and Economic Performance," Scholarly Articles 4553005, Harvard University Department of Economics.
  7. 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.
  8. 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.
  9. Sevestre, P. & Trognon, A., 1985. "A note on autoregressive error components models," Journal of Econometrics, Elsevier, vol. 28(2), pages 231-245, May.
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