nep-pol New Economics Papers
on Positive Political Economics
Issue of 2019‒10‒14
twelve papers chosen by
Eugene Beaulieu
University of Calgary

  1. Political Effects of the Internet and Social Media By Enikolopov, Ruben; Petrova, Maria; Zhuravskaya, Ekaterina
  2. The corruption growth relationship: Do political institutions matter? By Sen Kunal; Saha Shrabani
  3. Voter Heterogeneity and Political Corruption By Enriqueta Aragonès; Javier Rivas; Áron Tóth
  4. Condorcet efficiency of general weighted scoring rules under IAC: indifference and abstention By Mostapha Diss; Eric Kamwa; Issofa Moyouwou; Hatem Smaoui
  5. Fascistville: Mussolini's New Towns and the Persistence of Neo-Fascism By Carillo, Mario Francesco
  6. Social Mobility Explains Populism, Not Inequality or Culture By Eric S. M. Protzer
  7. On Latin American Populism, And Its Echoes Around the World By Sebastian Edwards
  8. Low-wage import competition and populist backlash: The case of Italy By Guglielmo Barone; Helena Kreuter
  9. Charity begins at home: The political economy of non-tariff barriers to trade in Southern Africa By Ledger Tracy
  10. Keeping Up with the Future: Upgrading Forecasts of Political Instability and Geopolitical Risk By Cullen S. Hendrix
  11. Can ATMs Get Out the Vote? Evidence from a Nationwide Field Experiment By Pereira Santos, João; Tavares, José; Vicente, Pedro C
  12. Chinese Investments in the US and EU Are Declining—for Similar Reasons By Jacob Funk Kirkegaard

  1. By: Enikolopov, Ruben; Petrova, Maria; Zhuravskaya, Ekaterina
    Abstract: How do the internet and social media affect political outcomes? We review empirical evidence from the recent political economy literature focusing especially on the work that considers those features that distinguish the internet and social media from traditional offline media, such as low barriers to entry and reliance on user-generated content. We discuss the main results about the effects of the internet, in general, and social media, in particular, on voting, street protests, attitudes toward government, political polarization, xenophobia, and politicians' behavior. We also review evidence on the role of social media in the dissemination of false news and summarize results about the strategies employed by autocratic regimes to censor internet and to use social media for surveillance and propaganda. We conclude by highlighting the key open questions about how the internet and social media shape politics in democracies and autocracies.
    Keywords: internet; social media; survey
    Date: 2019–09
  2. By: Sen Kunal; Saha Shrabani
    Abstract: Corruption is widely believed to negatively affect economic growth. However, many East and Southeast Asia countries either achieved or currently are achieving impressively rapid economic growth despite widespread corruption — the ‘East Asian Paradox’. Is this negative relationship equally likely to hold for autocracies and democracies? This paper examines the role of political institutions in mediating the corruption–growth relationship using panel data over one hundred countries for the period 1984–2016. We find clear evidence that corruption–growth relationship differs by the type of political institution, and the growth enhancing effect of corruption is more likely in autocracies than in democracies. The perceived credibility of long-term ruling political elites by promoting economic freedom to do business gives confidence to the firms, vital for investment and growth. Our findings provide suggestive evidence in support of the East Asian Paradox.
    Keywords: Panel data analysis,Democracy,Corruption,Economic growth
    Date: 2019
  3. By: Enriqueta Aragonès; Javier Rivas; Áron Tóth
    Abstract: We show that policies that eliminate corruption can depart from socially desirable policies and this inefficiency can be large enough to allow corruption to live on. Political competition between an honest (welfare maximiser) and corrupt politicians is studied. In our model the corrupt politician is at a distinct disadvantage: there is no asymmetric information, no voter bias and voters are fully rational. Yet, corruption cannot be eliminated when voters have heterogeneous preferences. Moreover, the corrupt politician can win the majority, as the honest politician tries to trade off the cost of eliminating corruption with its beneffits.
    Keywords: political corruption, political competition, voting
    JEL: D72
    Date: 2019–10
  4. By: Mostapha Diss (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique); Eric Kamwa (LC2S - Laboratoire caribéen de sciences sociales - CNRS - Centre National de la Recherche Scientifique - UA - Université des Antilles); Issofa Moyouwou (MASS - Université de Yaoundé I [Yaoundé]); Hatem Smaoui (CEMOI - Centre d'Économie et de Management de l'Océan Indien - UR - Université de La Réunion)
    Abstract: In an election, individuals may sometimes abstain or report preferences that include ties among candidates. How abstention or ties within individual preferences impact the performances of voting rules is a natural question addressed in the literature. We reconsider this question with respect to one of the main characteristics of a voting rule: its Condorcet efficiency; that is the conditional probability that the rule selects a Condorcet winner assuming that one exists. We explore the impact of both ties and abstention on the Condorcet efficiency of the whole class of weighted scoring rules in three-candidate elections under the Impartial Anonymous Culture assumption. It appears in general that the possibility of indifference or abstention increases or decreases the Condorcet efficiency of weighted scoring rules depending of the rule in consideration or the probability distribution on the set of observable voting situations.
    Date: 2020
  5. By: Carillo, Mario Francesco
    Abstract: This paper studies the link between local public spending and popular support and investigates its persistence across institutional transitions and over the long term. I explore the foundation of Mussolini's New Towns (Città di Fondazione) in Fascist Italy, a major infrastructure investment which played a central role in the fascist propaganda. Employing municipality-level data before and after the intervention, together with information on the timing of each New Town construction, I find that the intervention enhanced the electoral support for the Fascist Party, favoring the emergence of the Regime. Furthermore, I document a positive link between the New Towns and the electoral support for the Neo-Fascist Party, which persisted until the present day. Using individual survey data, I document that respondents near the Fascist New Towns built 70 years ago currently display political attitudes in line with the fascist ideology. Results are not driven by the geographic conditions that induced the location of the New Towns, socioeconomic differences, and migration patterns. Furthermore, I find no spurious effect of the New Towns that were planned but not built. The findings suggest that public spending may have long-lasting effects on political and cultural attitudes, which persist across major institutional changes.
    Keywords: Political attitudes, infrastructures, democratic transitions
    JEL: N0 P0 Z1
    Date: 2018–05–27
  6. By: Eric S. M. Protzer (Center for Global Development)
    Abstract: What is driving contemporary populism, for example Brexit, Trump, the Gilets Jaunes, and Five-Star? Commonly-accepted answers are divided into two schools of thought, one economic and one cultural. The main explanation in the former camp is income inequality; those in the latter are social media-induced ideological polarization, unprecedented levels of immigration, and older generations reacting against millennial values. This paper exploits geographic variation in the incidence of populism to apply cross-sectional regression analysis to these arguments, and concludes that they are highly unconvincing. Instead, the thus-largely overlooked factor of social mobility is found to have far greater explanatory power. Four settings are analyzed: the 2016 US Presidential Election, the 2017 French Presidential Election, the 2019 European Parliament Elections, and the political stability of developed countries in 2018. The article contends that the decisiveness of social mobility as an explanatory variable for populism is plausibly rooted in universal human conceptions of fairness.
    Keywords: Inclusive Growth, Populism
    Date: 2019–09
  7. By: Sebastian Edwards
    Abstract: In this paper I discuss the ways in which populist experiments have evolved historically. Populists are charismatic leaders that use a fiery rhetoric to pitch the interests of “the people” against those of banks, large firms, multinational companies, the IMF, and immigrants. Populists implement redistributive policies that violate the basic laws of economics, and in particular budget constraints. Most populist experiments go through five distinct phases that span from euphoria to collapse. Historically, the vast majority of populist episodes end up with declines in national income. When everything is over, incomes of the poor and middle class tend to be lower than when the experiment was launched. I argue that many of the characteristics of traditional Latin American populism are present in more recent manifestations from around the globe.
    JEL: D71 D72 D74 D78 E52 E62 N16
    Date: 2019–10
  8. By: Guglielmo Barone (University of Padova and RCEA); Helena Kreuter (FiFo Institute for Public Economics, University of Cologne)
    Abstract: The surge of populism in many advanced countries calls for the analysis of its causes. In this paper, we empirically study the role of trade globalization in shifting the electoral base toward populism. We proxy trade shock with swiftly rising import competition from China and compare the voting pattern at the parliamentary national elections from 1992 to 2013 in about 8,000 Italian municipalities differently exposed to the trade shock. We instrument import competition with Chinese export flows to other high-income countries and estimate the model in first differences. Our results show that trade globalization increases support for populist parties; they are robust to a large number of sensitivity checks. Moreover, we show that voters’ protest reaction also takes the form of an increase in invalid ballot papers and a drop in turnout. To rationalize these findings, we further offer evidence that import competition worsens labor market conditions – higher unemployment and lower income – and is associated with a rise in inequality, as predicted by trade theory.
    Keywords: trade globalization, populism, inequality
    JEL: D72
    Date: 2019–10
  9. By: Ledger Tracy
    Abstract: Increased intra-regional trade in southern Africa will have a positive impact on economic growth. However, this requires a shifting of loyalties from the national to the regional. Tension between the goals of long-term regional development and shorter-term national imperatives remains unresolved.This study presents a review of recent and current local content regulation (LCR) initiatives across a sample of the South African Development Community countries. LCRs are widely used across these countries, and their use has increased recently. Evidence suggests that the impact of LCRs is mixed, depending on their national context, whether or not they are implemented in line with the genuine desire to deliver local development, and whether they can remain corruption-free. LCRs may have long-term positive domestic and regional benefits, if they support sustainable local enterprise development and employment.In time this should translate into higher levels of growth across the region, and thus drive higher levels of trade.
    Keywords: Local content,Regional integration,Southern African Development Community
    Date: 2019
  10. By: Cullen S. Hendrix (Peterson Institute for International Economics)
    Abstract: The nature and magnitude of geopolitical risk is changing more rapidly than the ability to anticipate it, with increasingly severe economic consequences. This Policy Brief discusses the economic costs and risks associated with episodes of political instability, arguing that firms, government agencies, and international institutions must update their forecasting and risk assessment efforts to take global factors into account. Since the global financial crisis, political instability has shifted from emerging-market countries in the developing world to larger, more globally impactful econo¬mies. Acknowledging this changing risk profile—and developing better tools to predict major episodes of instability—will allow both policymakers and firms to plan with greater confidence.
    Date: 2019–07
  11. By: Pereira Santos, João; Tavares, José; Vicente, Pedro C
    Abstract: We report on a large-scale field experiment to assess ATMs (automatic teller machines) capacity to "get out the vote". This is a heretofore unexploited method. Our experimental design used the universe of functioning ATMs in Portugal. We randomly selected a set of treatment civil parishes, where a civic message took over the totality of ad time, which we compare with a set of control areas. The campaign we follow was active for three days before and during the 2017 local elections. Although we do not achieve statistical significance on a stable but small average treatment effect, when we consider the intensity of treatment, results show a statistically significant increase in the likelihood of voting. Placebo tests using turnout rates in previous elections strengthen our interpretation. We ran a post-treatment survey around ATMs located in two neighbouring civil parishes, one treated, the other not. We found a sizeable difference in recall.
    Keywords: ATMs; Local Elections; Portugal; Voter mobilization
    JEL: C93 D72 H70
    Date: 2019–09
  12. By: Jacob Funk Kirkegaard (Peterson Institute for International Economics)
    Abstract: For years China has been one of the world’s most rapidly growing sources of outward foreign direct investment. Since peaking in 2016, however, Chinese outward investments, primarily to the United States but also the European Union, have declined dramatically, especially in response to changes in China’s domestic rules on capital outflows and in the face of rising nationalism in the United States. Concerns about growing Chinese influence in other economies, the ascendant role of an authoritarian government in Beijing, and the possible security implications of Chinese dominance in the high-technology sector have put Chinese outward investments under intense international scrutiny. This Policy Brief analyzes the most recent trends in Chinese investments in the United States and the European Union and reviews recent political and regulatory changes both have adopted toward Chinese inward investments. It also explores the emerging transatlantic difference in the regulatory response to the Chinese information technology firm Huawei. Concerned about national security and as part of the ongoing broader trade friction with China, the United States has cracked down far harder on the company than the European Union.
    Date: 2019–09

This nep-pol issue is ©2019 by Eugene Beaulieu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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