nep-pol New Economics Papers
on Positive Political Economics
Issue of 2021‒01‒18
fourteen papers chosen by
Eugene Beaulieu
University of Calgary

  1. Priority Roads: the Political Economy of Africa’s Interior-to-Coast Roads By Roberto Bonfatti; Yuan Gu; Steven Poelhekke
  2. Extreme Inequality and the Structure of Political Cleavages in South Africa, 1994-2019 By Amory Gethin
  3. Do Voters Choose Better Politicians than Political Parties? Evidence from a Natural Experiment in Italy By Alfano, Maria Rosaria; Baraldi, Anna Laura; Papagni, Erasmo
  4. Political Parties as Drivers of U.S. Polarization: 1927-2018 By Nathan J. Canen; Chad Kendall; Francesco Trebbi
  5. The COVID-19 Pandemic and the 2020 U.S. Presidential Election By Baccini, Leonardo; Brodeur, Abel; Weymouth, Stephen
  6. How to Get Away with Spreading COVID-19: Political Connections and Pandemic Response By Kubinec, Robert; Lee, Haillie Na-Kyung; Tomashevskiy, Andrey
  7. Appointed or Elected? How Mayoral Accountability Impacts the Provision of Policing By Colombo, Andrea; Tojerow, Ilan
  8. Strategic Delegation in the Formation of Modest International Environmental Agreements By Sarah Spycher; Ralph Winkler
  9. The Limit of the Non-dictatorship Index By Bednay, Dezső; Fleiner, Balázs; Tasnádi, Attila
  10. Not all that glitters is gold: political stability and trade in Sub-Saharan Africa By Simplice A. Asongu; Thales P. Yapatake Kossele; Joseph Nnanna
  11. Unfolding the Ongoing Political Dynamics in Ethiopia : Why the Departure of TPLF and Its Doctrine is Important By Demiessie, Habtamu
  12. How Political Conflicts Distort Bilateral Trade: Firm-Level Evidence from China By Yuhua Li; Ze Jian; Wei Tian; Laixun Zhao
  13. Unbridgeable: Why Political Economists Cannot Accept Capital as Power By Nitzan, Jonathan; Bichler, Shimshon
  14. Revisiting the Causal Effect of Education on Political Participation and Interest By Bömmel, Nadja; Heineck, Guido

  1. By: Roberto Bonfatti; Yuan Gu; Steven Poelhekke
    Abstract: Africa’s interior-to-coast roads are well suited to export natural resources, but not to support regional trade. Are they the optimal response to geography and comparative advantage, or the result of suboptimal political distortions? We investigate the political determinants of road paving in West Africa across the 1965-2012 period. Controlling for ge¬ography and the endogeneity of democratization, we show that autocracies tend to connect natural resource deposits to ports, while the networks expanded in a less interior-to-coast way in periods of democracy. This result suggests that Africa’s interior-to-coast roads are at least in part the result of suboptimal political distortions.
    Keywords: political economy, democracy, infrastructure, natural resources, development
    JEL: P16 P26 D72 H54 O18 Q32
    Date: 2019–01–22
  2. By: Amory Gethin (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab)
    Abstract: This paper draws on political attitudes surveys conducted at the time of general elections to study the interplay of social inequalities, changing social structures, and racial cleavages in South Africa since 1994. I analyze the link between voting behaviors and the main socioeconomic characteristics of voters, in particular income, education level, wealth, race, and their interactions. I document extreme socioeconomic political divides, which are strongly, though not entirely explained by South Africa's exceptional racial inequalities. The gradual decline of the dominant African National Congress since 1994 has been driven by the shift of the new Black middle class towards opposition parties. Growing abstention among the youth and the lower-educated has further eroded support for the ANC. I also put South Africa's cleavage politics in comparative perspective, focusing on how the transformation of dominant-party systems in new democracies plays a role in crystallizing new sociopolitical identities.
    Date: 2020–07
  3. By: Alfano, Maria Rosaria; Baraldi, Anna Laura; Papagni, Erasmo
    Abstract: This work analyses the effect of the two preference voting systems – proportional system with blocked lists of candidates vs proportional system with open list of candidates - on the quality of politicians. The exogenous variation in the Italian Parliament electoral system (Law n. 270/2005) - which marked the switch from an open to a closed list - allows us implement a Difference-inDifferences approach to compare the change in politicians' quality (as their education level) across the treatment group (the Parliamentarians) and the control group (the regional councillors) of politicians before and after the electoral reform is enforced. We find that the introduction of the reform lowered the politicians' ability. The result is common for Senators and Deputies and it is robust to the inclusion of control variables and to the restriction of treatment group to pastappointed Parliamentarians. This evidence suggests that voters are able to choose more qualifying politicians than political parties and it may be an argument in favor the re-introduction, in the electoral law, of preference voting schemes.
    Keywords: Research Methods/ Statistical Methods
    Date: 2020–12–17
  4. By: Nathan J. Canen; Chad Kendall; Francesco Trebbi
    Abstract: The current polarization of elites in the U.S., particularly in Congress, is frequently ascribed to the emergence of cohorts of ideologically extreme legislators replacing moderate ones. Politicians, however, do not operate as isolated agents, driven solely by their preferences. They act within organized parties, whose leaders exert control over the rank-and-file, directing support for and against policies. This paper shows that the omission of party discipline as a driver of political polarization is consequential for our understanding of this phenomenon. We present a multi-dimensional voting model and identification strategy designed to decouple the ideological preferences of lawmakers from the control exerted by their party leadership. Applying this structural framework to the U.S. Congress between 1927- 2018, we find that the influence of leaders over their rank-and-file has been a growing driver of polarization in voting, particularly since the 1970s. In 2018, party discipline accounts for around 65% of the polarization in roll call voting. Our findings qualify the interpretation of - and in two important cases subvert - a number of empirical claims in the literature that measures polarization with models that lack a formal role for parties.
    JEL: D72 P48
    Date: 2020–12
  5. By: Baccini, Leonardo; Brodeur, Abel; Weymouth, Stephen
    Abstract: What is the effect of the COVID-19 pandemic on the 2020 U.S. presidential election? Guided by a pre-analysis plan, we estimate the effect of COVID- 19 cases and deaths on the change in county-level voting for Donald Trump between 2016 and 2020. To account for potential confounders, we include a large number of COVID-19-related controls as well as demographic and so- cioeconomic variables. Moreover, we instrument the numbers of cases and deaths with the share of workers employed in meat-processing factories to sharpen our identification strategy. We find that COVID-19 cases negatively affected Trump's vote share. The estimated effect appears strongest in ur- ban counties, in states without stay-at-home orders, in swing states, and in states that Trump won in 2016. A simple counterfactual analysis suggests that Trump would likely have won re-election if COVID-19 cases had been 5 percent lower. We also find some evidence that the COVID-19 incidence had a positive effect on voters' mobilization, helping Biden win the presidency.
    Keywords: COVID-19,pandemic,elections,political behavior,pre-analysis plan
    JEL: D72 I18
    Date: 2021
  6. By: Kubinec, Robert (Princeton University); Lee, Haillie Na-Kyung; Tomashevskiy, Andrey
    Abstract: While the aim of COVID-19 policies is to suppress the pandemic, many fear that the burden of the restrictions will fall more heavily on less privileged groups. We show one potential mechanism for COVID-19 responses to increase inequality by examining the intersection of business restrictions and business political connections. Using an online survey of 2,735 business employees and managers in Ukraine, Egypt and Venezuela over the summer of 2020, we show that businesses with political connections to government officials were significantly less likely to shut down as a result of COVID-19 policies. This finding suggests that measures designed to mitigate COVID-19 are less effective in countries with a weak rule of law if politically connected firms are able to circumvent restrictions by leveraging political connections to receive preferential treatment. In addition, politically-connected firms are no more likely--and sometimes even less likely--to engage in social-distancing policies to mitigate the pandemic despite the fact that they are more likely to remain open.
    Date: 2020–12–21
  7. By: Colombo, Andrea (Université Libre de Bruxelles); Tojerow, Ilan (Free University of Brussels)
    Abstract: This paper studies how the system by which mayors are elected impacts mayoral accountability and their provision of public goods. To do so, we analyze policing and crime incidence under mayors directly elected by voters and under mayors appointed by an elected body. Our identification strategy exploits a natural experiment provided by the introduction in 2005 of direct mayoral elections in the municipalities of one region of Belgium, Wallonia. Estimating a difference-in-differences model with a rich dataset registering locally-reported crimes from 2000 to 2012, our results show a post-reform decrease in overall crime between 4.9% and 5.7%, depending on the specification. Our results further suggest that more accountable mayors prefer fighting certain type of crimes more intensely, rather than increasing police efficiency overall. Lastly, our results show that the post-reform benefits we observe dissolve when the management of local police has to be coordinated among neighboring mayors, especially if they come from different political parties.
    Keywords: electoral accountability, crime, mayoral election, police
    JEL: D72 H10 K14 K40
    Date: 2020–12
  8. By: Sarah Spycher; Ralph Winkler
    Abstract: We reassess the well-known “narrow-but-deep” versus “broad-but-shallow” trade-off in international environmental agreements (IEAs), taking into account the principal-agent relationship induced by the hierarchical structure of international policy. To this end, we expand the modest coalition formation game, in which countries first decide on whether to join an agreement and then decide on emissions by a strategic delegation stage. In the weak delegation game, principals first decide whether to join an IEA, then delegate the domestic emission choices to an agent. Finally, agents in all countries decide on emissions. In countries not joining the IEA, agents choose emissions to maximize their own payoff, while agents of countries joining the IEA set emissions to internalize some exogenously given fraction of the externalities that own emissions cause on all members of the IEA. In the strong delegation game principals first delegate to agents, which then decide on membership and emissions. We find that strategic delegation crowds out all efforts to increase coalition sizes by less ambitious agreements in the weak delegation game, while in the strong delegation game the first-best from the principals’ point of view can be achieved.
    Keywords: international climate policy, coalition formation game, political economy, strategic delegation, strategic voting
    JEL: Q54 Q58 C72 D62 H41 P16
    Date: 2020
  9. By: Bednay, Dezső; Fleiner, Balázs; Tasnádi, Attila
    Abstract: In this paper we determine the asymptotic behavior of the Non-dictatorship Index (NDI) introduced in Bednay, Moskalenko and Tasnádi (2019). We show that if m denotes the number of alternatives, then as the number of voters tends to infinity the NDI of any anonymous voting rule tends to (m − 1)/m, which equals the NDI of the constant rule.
    Keywords: voting rules, dictatorship, non-dictatorship index
    JEL: D71
    Date: 2020–12–29
  10. By: Simplice A. Asongu (CEREDEC, Bangui, CAR); Thales P. Yapatake Kossele (CEREDEC, Bangui, CAR); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria)
    Abstract: This study examines linkages between political stability and trade openness dynamics in a panel of 44 countries in SSA from 1996 to 2016. The empirical evidence is based on the generalized method of moments. From the findings, the negative relationship between political stability and merchandise trade is not significant while the negative relationship between political stability and trade openness (exports plus imports) is significant. Hence, the findings do not validate the tested hypothesis that political stability/no violence increases trade in the sub-region. The perspective that some forms of political stability can slow down and prevent international trade is consistent with Oslon in Rise and Decline of Nations (RADON) and recent contributions to the economic development literature which have shown that not all forms of political stability are development friendly because much depends on the extent to which stability translates into, inter alia, good governance. The principal policy implication is that standards of political governance need to be boosted in order to improve the anticipated effects of political stability on trade, especially in the light of the ambitious African Continental Free Trade Area (AfCFTA). Other policy implications are discussed.
    Keywords: Political Stability; Trade; Sub-Saharan Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2021–01
  11. By: Demiessie, Habtamu
    Abstract: The Tigray People Liberation Front (TPLF) has been maker and breaker in the politics and state governance in Ethiopia since 1991.The last three years, however, marked when TPLF experienced a steep decline in the influence curve. As a reflection of a slump in its influence, TPLF has been aggressively reacting against the central government. In the early days of November 2020, TPLF „dared‟ a military setback against the Ethiopian army division in Tigray region, where TPLF holds government power.In response, the federal government forces, in collaboration with the paramilitary and militia forces of regional states of Amhara and Afar waged massive strike against TPLF`s forces. The government of Ethiopia has defined the cause of military intervention in Tigray region to „enforce law and preserve the sovereignty of the country‟. A one month military operation is getting to its end, and TPLF big-wigs are on a run away. As a matter of fact, TPLF has been shaping essential constructs that define discourses in Ethiopia`s political play field for the past three decades. The doctrine of TPLF political line is based on the concept of revolutionary democracy. Revolutionary democratic principles were governing the courses of politics in Ethiopia by defining some of the most important subjects of political economy like interpretation of political history of Ethiopia on Marxian notion of class conflicts; partisan view of rights; dominance of identity politics over citizen politics; the dominance of government in the economic order, among others. However, the recent changes unfolding in Ethiopia would end the age old influence of TPLF narratives on essential subjects of political economy. More importantly, the weakening of TPLF influences hopes for a new page by ending the roots of distortions that has been impeding political development in Ethiopia. In this regard, the departure of TPLF hopes for popular causes and Ethiopian values to take firm position in the political and state governances. This paper reflects on the prospective face of Ethiopian political scenery in the post-TPLF period. By way of illustration, the backdrops of TPLF`s political doctrine is defined, discussed and critically evaluated. The paper also examines possible changes in the political, economic and social businesses in Ethiopia accompanied by the departure of TPLF`s influences.
    Keywords: Ethiopia, TPLF, Revolutionary Democracy
    JEL: H0 P3
    Date: 2020–12–05
  12. By: Yuhua Li (Department of Information Management, Zhejiang University of Finance & Economics, China); Ze Jian (School of business administration, Guangdong University of Finance & Economics, China); Wei Tian (School of Ecnomics, Peking University, China); Laixun Zhao (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)
    Abstract: We examine how political conflicts affect trade, using both the Goldstein score that scales all political conflicts daily worldwide and the firm-country-product level data of Chinese imports. We find that political conflicts reduce Chinese imports in general. Speci cally, (i) the imports of State-owned enterprises (SOEs) are most reduced, and the effects mostly fall on imports for intermediate goods while not so much on capital goods; (ii) foreign-invested enterprises (FIEs) are less negatively affected, because most of their trade is processing, which is less negatively affected by political conflict than ordinary trade. These results are obtained via mechanisms in the mode of trade (processing vs. ordinary), variations in broad economic categories (BEC) and import boycotts and export controls.
    Keywords: Political conflicts; Trade; State-owned enterprises; Goldstein score
    JEL: F1 F51
    Date: 2021–01
  13. By: Nitzan, Jonathan; Bichler, Shimshon
    Abstract: The theory of capital as power (CasP) is radically different from conventional political economy. In the conventional view, mainstream as well as heterodox, capital is seen a 'real' economic entity engaged in the production of goods and services, and capitalism is thought of as a mode of production and consumption. Finance in this approach is either a mere reflection/lubricant of the real economy (the mainstream view), or a parasitic fiction (the heterodox perspective). CasP rejects this framework. Capital, it argues, is not a productive economic entity, but a symbolic representation of organized societal power writ large, and capitalism should be analysed not as a mode of production and consumption, but as a mode of power. In this approach, finance is neither a reflection nor a fiction, but the symbolic language that organizes and creorders - or creates the order of - capitalized power. These are foundational claims. They go to the very heart of political economy, and they have far-reaching implications. So far-reaching, in fact, that if we accept them, we must rewrite, often from scratch, much of the theory, history and possible futures of the capitalist order. Many have complained about CasP being aloof. Our approach, they have argued, insists on being 'right' - to the exclusion of all others. It shows no interest in 'building bridges'. It dismisses neoclassical liberalism altogether, and although sometimes sympathetic to Marx, it aims not to revise Marxism, but to discard it altogether. In this research note - excerpted and revised from our 2020 invited-then-rejected interview with Revue de la regulation - we explain the basis for these complaints and why CasP and conventional political economy cannot be easily bridged. Stated briefly, the problem is not unwillingness but built-in barriers. As it stands, political economy cannot accept capital as power. Its very foundations prevent it from doing so.
    Keywords: capital as power,Marxism,neoclassical economics,political economy,power,value
    JEL: P16 D46 C18
    Date: 2021
  14. By: Bömmel, Nadja (Leibniz-Institut für Bildungsverläufe (LIfBi)); Heineck, Guido (University of Bamberg)
    Abstract: A substantial number of studies suggests a strong relationship between education and aspects of political participation and interest. Only a small body of literature, however, addresses whether these patterns represent causal effects. We add to this research and re-examine the question in the German context. For identification, we exploit an exogenous increase in lower secondary compulsory schooling between 1949 and 1969 in former West Germany, and use data from the National Educational Panel Study (NEPS) to identify individuals' educational biographies more precisely than prior research. Our results reinforce findings from Siedler (2010): multiple regression analyses first indicate a positive, statistically significant correlation between schooling and our measures of political activities. IV estimates, however, are all trivial, for both compliers and the full sample, indicating that the reform did not stimulate long-term changes in political participation and interest.
    Keywords: school reform, political participation, IV estimation, returns to education, Germany
    JEL: I2 H4 H23
    Date: 2020–12

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