nep-pol New Economics Papers
on Positive Political Economics
Issue of 2012‒10‒06
fifteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Conditional Cash Transfers, Political Participation, and Voting Behavior By Baez, Javier E.; Camacho, Adriana; Conover, Emily; Zárate, Román Andrés
  2. Political Competition, Electoral System and Corruption: the Italian case By M. Rosaria Alfano, M.R.A.; A. Laura Baraldi, A.L.B.; C. Cantabene, C.C.
  3. Immigrants' rights and benefits. A public opinion analysis for Spain By Robert Duval-Hernandez; Ferran Martinez i Coma
  4. Condorcet's principle and the strong no-show paradoxes By Duddy, Conal
  5. InternationalPolitics and Import Diversification in the Second Wave of Globalization By Sergey Mityakov; Heiwai Tang; Kevin K. Tsui
  6. New Tools for the Analysis of Political Power in Africa By Ilia Rainer; Francesco Trebbi
  7. How Is Power Shared In Africa? By Patrick Francois; Ilia Rainer; Francesco Trebbi
  8. Terrorism and Political Self-Placement in European Union Countries By Athina Economou; Christos Kollias
  9. Political Change in the Middle East: An Attempt to Analyze the “Arab Spring” By Martin Beck; Simone Hüser
  10. Resource Wars and Confiscation Risk By Frederick van der Ploeg
  11. Political Risk, Institutions and Foreign Direct Investment: How Do They Relate in Various European Countries? By Vladimír Benácek; Helena Lenihan; Bernadette Andreosso-O’Callaghan; Eva Michalíková; Denis Kan
  12. How Accurate are Surveyed Preferences for Public Policies? Evidence from a Unique Institutional Setup By Patricia Funk
  13. Growth-Friendly Dictatorships By Giacomo De Luca; Jean-François Maystadt; Petros G. Sekeris
  14. On the Path to Trade Liberalization: Political Regimes in International Trade Negotiations By Florian Mölders
  15. The Political Economy of Regional Power: Turkey under the AKP By André Bank; Roy Karadag

  1. By: Baez, Javier E. (World Bank); Camacho, Adriana (Universidad de los Andes); Conover, Emily (Hamilton College); Zárate, Román Andrés (Universidad de los Andes)
    Abstract: This paper estimates the effect of enrollment in a large scale anti-poverty program in Colombia, Familias en Acción (FA), on intent to vote, turnout and electoral choice. For identification we use discontinuities in program eligibility and variation in program enrollment across voting booths. We find that FA has a positive effect on political participation in the 2010 presidential elections by increasing the probability that program beneficiaries register to vote and cast a ballot, particularly among women. Regarding voter's choice, we find that program participants expressed a stronger preference for the official party that implemented and expanded the program. Overall, the findings show that voters respond to targeted transfers and that these transfers can foster support for incumbents, thus making the case for designing political and legislative mechanisms, as the laws recently passed by the Colombian government, that avoid successful anti-poverty schemes from being captured by political patronage.
    Keywords: Conditional Cash Transfers, voting behavior, Colombia
    JEL: O10 D72 P16
    Date: 2012–09
  2. By: M. Rosaria Alfano, M.R.A.; A. Laura Baraldi, A.L.B.; C. Cantabene, C.C.
    Abstract: Economic and political literature widely studied the effects of electoral system on corruption. But very little attention has been dedicated to the role of political competition in explaining this relationship. We hypothesize that the proportionality degree of the electoral system impacts political corruption directly and in a conditional way: through the degree of electoral competition among political parties. The estimation results, on a sample of the 20 Italian regions over 26 years, show that both the direct and the indirect effect matter in explaining corruption. As the electoral system becomes more proportional, corruption directly decrease. This beneficial effect is reinforced by an increase in political competition. If, otherwise, the proportionality degree of the electoral system decreases, direct and indirect effect push corruption in opposite directions. Our findings are robust to different estimation techniques and to other measures of proportionality.
    Keywords: Political Competition; Electoral System; Corruption
    JEL: C23 D72 K42
    Date: 2012–09
  3. By: Robert Duval-Hernandez; Ferran Martinez i Coma
    Abstract: We study the preferences of natives for granting immigrants a set of rights. With a simple political economy model, we predict that unskilled natives oppose granting immigrants access to publicly provided goods when immigrants are relatively unskilled because of the associated competition for these goods. Alternatively, skilled natives oppose granting voting rights out of fear of costly redistributive fiscal policies. The opposite predictions are obtained if immigrants are more skilled than natives. We test these predictions with a dataset of public opinion on immigration in Spain, exploiting individual and regional variation in the data. The data supports these hypotheses in the case of public health services and voting rights. For public education, the results suggest that other considerations may matter more than the fiscal concerns captured in the model.
    Keywords: Public Opinion, Immigration, Political Economy, Spain
    Date: 2012–09
  4. By: Duddy, Conal
    Abstract: We consider two no-show paradoxes, in which a voter obtains a preferable outcome by abstaining from a vote. One arises when the casting of a ballot that ranks a candidate in first causes that candidate to lose the election. The other arises when a ballot that ranks a candidate in last causes that candidate to win. We show that when there are at least four candidates and when voters may express indifference, every voting rule satisfying Condorcet's principle must generate both of these paradoxes.
    Keywords: Condorcet; no show; paradox; abstention; voting; participation; positive involvement; negative involvement
    JEL: D7 D71
    Date: 2012–09–24
  5. By: Sergey Mityakov; Heiwai Tang; Kevin K. Tsui
    Abstract: We provide evidence that deterioration of relations between the United States and another country, measured by divergence in their UN General Assembly voting patterns, reduces US imports from that country during the second wave of globalization. Though statistically, significant, such an effect of "political distance" on trade is small compared with the frictions imposed by other trade barriers. Indeed, using sector-level trade data, we show that except for petroleum and some chemical products, US imports are not affected by international politics. American firms, however, diversify their import of crude oil significantly away from the political opponents of the US, even after controlling for wars, sanctions, and tariffs. To explain the distinctive political impact on oil import diversification, we test the strategy commodity hypothesis over the hold-up risk hypothesis, because while oil is widely thought to be a strategic commodity, oil trade is also often associated with backward vertical FDI that is subject to the risks of hold-up and expropriation. Our results suggest both political and economic forces are at work. First, although the political limits on oil import are only significant when American firms import oil from dictators, the effect is even more pronounced when the exporting countries have high expropriation risk. Second, a similar import pattern is observed only for other major powers or countries with oil companies operating overseas. Finally, we show that while the US imports of a few strategic commodities, such as tin, are also discouraged by political distance, a similar political effect is also observed in the import of R&D intensive goods, in which case quasi-rents derived from backward FDI in R&D may be expropriated by a hostile government.
    Keywords: international politics, hold-up risk, energy security
    JEL: F13 F51 F59 Q34
    Date: 2012
  6. By: Ilia Rainer; Francesco Trebbi
    Abstract: The study of autocracies and weakly institutionalized countries is plagued by scarcity of information about the relative strength of different players within the political system. This paper presents novel data on the composition of government coalitions in a sample of fifteen post-colonial African countries suited to this task. We emphasize the role of the executive branch as the central fulcrum of all national political systems in our sample, especially relative to other institutional bodies such as the legislative assembly. Leveraging on the impressive body of work documenting the crucial role of ethnic fragmentation as a main driver of political and social friction in Africa, the paper further details the construction of ethnic composition measures for executive cabinets. We discuss how this novel source of information may help shed light on the inner workings of typically opaque African political elites.
    JEL: H1 O38 O55
    Date: 2012–09
  7. By: Patrick Francois; Ilia Rainer; Francesco Trebbi
    Abstract: This paper presents new evidence on the power sharing layout of national political elites in a panel of African countries, most of them autocracies. We present a model of coalition formation across ethnic groups and structurally estimate it employing data on the ethnicity of cabinet ministers since independence. As opposed to the view of a single ethnic elite monolithically controlling power, we show that African ruling coalitions are large and that political power is allocated proportionally to population shares across ethnic groups. This holds true even restricting the analysis to the subsample of the most powerful ministerial posts. We argue that the likelihood of revolutions from outsiders and the threat of coups from insiders are major forces explaining such allocations. Further, over-representation of the ruling ethnic group is quantitatively substantial, but not different from standard formateur premia in parliamentary democracies. We explore theoretically how proportional allocation for the elites of each group may still result in misallocations in the non-elite population.
    JEL: H1 O38 O55
    Date: 2012–09
  8. By: Athina Economou; Christos Kollias
    Abstract: Terrorism is widely regarded as a public bad vis-à-vis security - a public good - affecting the subjective well-being of citizens. As studies have shown, citizens' risk-perceptions and risk-assessment are affected by large scale terrorist acts. Reported evidence shows that individuals are often willing to trade-off civil liberties for enhanced security particularly as a post-terrorist attack reaction as well as adopting more conservative views. Within this strand of the literature, this paper examines whether terrorism and in particular mass-casualty terrorist attacks affect citizens' political selfplacement on the left-right scale of the political spectrum. To this effect the Eurobarometer Surveys for twelve European Union countries are utilised and Ordered Probit models are employed for the period 1985-2010 with over 230 thousand observations used in the estimations. On balance, the findings reported herein seem to be pointing to a shift in respondents' self-positioning towards the right of the political spectrum.
    Date: 2012
  9. By: Martin Beck (GIGA German Institute of Global and Area Studies); Simone Hüser (Konrad Adenauer Stiftung)
    Abstract: This article deals with the Arab Spring as a process of deep political change in the Arab world, previously the only major world area where authoritarianism persisted unchallenged for decades. While in various countries of the Arab world mass protests in 2011 forced rulers to resign, other authoritarian regimes have – despite political and economic pressure – so far been able to remain in power, or have even been only insignificantly affected. This paper applies central social science approaches in order to analyze recent developments in the region – a major task of theoretically oriented social sciences in the coming years. In addition to providing an overview of the existing literature on the Arab Spring, the article examines the empirical results of political diversification in the Arab world. A two-by-two matrix of political rule that differentiates according to the type of rule and the degree of stability is presented and discussed. Although the analysis draws heavily on rent theory, it also applies findings from transition theory and revolution theory to illuminate the current political dynamics in the Middle East.
    Keywords: Arab Spring, Middle East, rent theory, revolution theory, transition theory, democratization, authoritarianism, political and economic liberalization
    Date: 2012–08
  10. By: Frederick van der Ploeg
    Abstract: Resource wars can be modeled with two-way regime switch uncertainty and contest success functions. Fighting is more intense if the plitical system is less cohesive, fighting technology is well developed, oil reserves are high and the wage is low. More government stability intensifies resource wars, but leads to less voracious oil depletion. Oil extraction is more aggressive in the presence of contested resources, but less so with more government stability. Our model of resource wars builds on a model of confiscation risk and of perennial political cycles. Not confiscation, but risk of confiscation matters for efficiency. Before confiscation, oil reserves are depleted too rapidly. Risk of confiscation is associated with a hold-up problem, which depresses exploration investment and exacerbates the inefficiences. A subsidy can correct for this. If there is a chance that the economy flips back to no confiscation outcomes are less distorting.
    Keywords: resource wars, contest success functions, political cohesiveness, confiscation risk, taxation, regime switch, oil reserves uncertainty, Hotelling principle, exhaustible resources, exploration investment, hold-up problem
    JEL: D81 H20 Q31 Q38
    Date: 2012
  11. By: Vladimír Benácek (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Helena Lenihan (University of Limerick); Bernadette Andreosso-O’Callaghan (University of Limerick); Eva Michalíková (Brno University of Technology); Denis Kan (University of Limerick)
    Abstract: This paper examines theoretically and empirically the extent to which the decision by foreign firms to invest in a group of countries is influenced by economic factors, as opposed to political risk and institutional performance. We consider the importance of these factors as drivers of foreign direct investment (FDI) for 32 European countries (subsequently divided into three pooled clusters) by means of panel regression techniques in two specifications over the 1995-2008 period. Our results suggest that risk and institutional factors considered in both static and dynamic perspectives significantly influence the behaviour of investors. Policies and institutions that vary widely between countries modify their decision-making, so that the purely economic factors have different statistical significance and impacts on the intensity of FDI, as was revealed by clustering countries into three groups according to levels of economic maturity. Additionally, not all factors of risk have an identical impact on FDI decisions in particular groups of countries. However, we find that as measures of political risk, monetary discipline, low regulation, effective government and good education prove to be highly significant for most country groupings. All of these measures reduce political risk and positively affect the level of FDI.
    Keywords: FDI; Political risk; Economic institutions; Panel regression; European Union
    JEL: F2 D81 C23
    Date: 2012–07
  12. By: Patricia Funk
    Abstract: Opinion polls are widely used to capture public sentiments on a variety of issues. If citizens are unwilling to reveal certain policy preferences to others, opinion polls may fail to characterize population preferences accurately. The innovation of this paper is to use unique data to measure biases in opinion polls for a broad range of policies. I combine data on 184 referenda held in Switzerland between 1987 and 2007, with post- ballot surveys that ask for each proposal how the citizens voted. The difference between stated preferences in the survey and revealed preferences at the ballot box provides a direct measure of bias in opinion polls. I find that these biases vary by policy areas, with the largest ones occurring in policies on immigration, international integration, and votes involving liberal/conservative attitudes. Also, citizens show a tendency to respond in accordance to the majority.
    Keywords: opinion polls, biases, preference falsification, direct democracy
    JEL: D03 Z
    Date: 2012–09
  13. By: Giacomo De Luca (University of York); Jean-François Maystadt (University of Luxembourg, Faculty of Law, Economics and Finance); Petros G. Sekeris (Center for Research in the Economics of Development, University of Namur)
    Abstract: In this paper we show that in highly unequal societies, different societal groups may support a rent-seeking dicator serving their interests better than the median voter in a democratic regime. Importantly, it is the stakes of dictator in the economy, in the form of capital ownership, that drives the support of individuals. In particular, in highly societies ruled by a capital-rich dictator endowed with the power to tax and appropriate at will, the elites support dictatorial policies that generate higher growth rates than the ones obtained under democracy. Such support arises despite the total absence of checks and balances on the dictator.
    Keywords: Regime type, capital distribution, growth
    JEL: O11 D72 H41
    Date: 2012–09
  14. By: Florian Mölders
    Abstract: The number of free trade agreements has increased substantially since 1980 despite efforts to promote multilateral trade liberalization. While there is evidence on the determinants of FTA formation, still little is known on the processing of trade agreements, particularly regarding the pre-implementation duration. This paper fills the research gap by using event data on the proposal, the negotiation, the signing, and the implementation of trade agreements. Duration analysis is employed to examine the connection between regime types and the lengths of the negotiation and the ratification stages. The results support the claim that higher levels of democratization and political constraints are associated with delays in the implementation of an agreement. This is primarily observable in the ratification stage. Moreover, I detect significantly prolonged negotiation talks and ratifications if the European Union participates.
    Keywords: Free trade agreements, international cooperation, duration analysis
    JEL: F13
    Date: 2012
  15. By: André Bank (GIGA German Institute of Global and Area Studies); Roy Karadag (GIGA German Institute of Global and Area Studies)
    Abstract: In 2006/2007 Turkey became a regional power in the Middle East, a status it has continued to maintain in the context of the Arab Spring. To understand why Turkey only became a regional power under the Muslim AKP government and why this happened at the specific point in time that it did, the paper highlights the self-reinforcing dynamics between Turkey’s domestic political-economic transformation in the first decade of this century and the advantageous regional developments in the Middle East at the same time. It concludes that this specific linkage – the “Ankara Moment” – and its regional resonance in the neighboring Middle East carries more transformative potential than the “Washington Consensus” or the “Beijing Consensus” so prominently discussed in current Global South politics.
    Keywords: regional power, political economy, Turkey, AKP, Middle East
    Date: 2012–09

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