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Political Alternation as a Restraint on Investing in Influence: Evidence from the Post-Communist Transition

Author

Listed:
  • Milanovic, Branko
  • Hoff, Karla
  • Horowitz, Shale

Abstract

We develop and implement a method for measuring the frequency of changes in power among distinct leaders and ideologically distinct parties that is comparable across political systems. We find that more frequent alternation in power is associated with the emergence of better governance in postcommunist countries. The results are consistent with the hypothesis that firms seek durable protection from the state, which implies that expected political alternation is relevant to the decision whether to invest in influence with the governing party or, alternatively, to demand institutions that apply predictable rules, with equality of treatment, regardless of the party in power.

Suggested Citation

  • Milanovic, Branko & Hoff, Karla & Horowitz, Shale, 2008. "Political Alternation as a Restraint on Investing in Influence: Evidence from the Post-Communist Transition," MPRA Paper 11829, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:11829
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    Cited by:

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    3. Irvin Mikhail Soto & Willy Walter Cortéz, 2015. "La corrupción en la burocracia estatal mexicana," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 17(33), pages 161-182, July-Dece.
    4. Thorsten Beck & Luc Laeven, 2006. "Institution building and growth in transition economies," Journal of Economic Growth, Springer, vol. 11(2), pages 157-186, June.

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    Keywords

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    JEL classification:

    • P37 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Legal
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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