Political Competition and Economic Performance: Evidence from the Italian Regions

Public Choice (Impact Factor: 0.91). 02/2009; 138(3):263-277. DOI: 10.1007/s11127-008-9358-y
Source: RePEc


We verify the predictions of the theoretical literature on the relationship between political competition and economic performance, holding that, when the predominance of an ideological dimension creates a political rent, the party exploiting it selects lower quality politicians whose policy choices worsen economic performance. We examine the sample of 15 Italian Regions from 1980 to 2002 that exploits the institutional reforms of 1995 as an exogenous shock to pre-existing rents. We find evidence that higher political competition improves economic performance, through the choice of more efficiency-oriented policies.

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Available from: Roberto Ricciuti
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    • "), having daughters (see Washington 2008), links to civil service (see Braendle and Stutzer 2010), education (see Ruske 2015), and numerous other socioeconomic characteristics and preferences (see, e.g., Ågren et al. 2007; Padovano and Ricciutti 2009; Freier and Thomasius 2012; Okulicz-Kozaryn 2014). Important contributions in political science and sociology turned their attention relatively early to the question of whether military service and know-how specific to the use of force affect the political willingness to support military action (see Huntington 1957; Nordlinger 1977). "
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    Full-text · Article · Apr 2015 · Journal of Economic Behavior & Organization
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    • "In recent times, a few attempts have been undertaken to test the empirical validity of these theoretical arguments. Studies by Besley and Case (2003), Svensson (2005), Ashworth et al. (2006), Padovano and Ricciuti (2009), Besley et al. (2010), and Ghosh (2010) have found that higher political competition improves economic performance, through the choice of more efficient public policies. On the contrary, in a panel data analysis of OECD countries, Padovano and Ricciuti (2008) found that greater political competition is correlated with an increase in short-term, redistributive policy choices, aimed at buying votes, which depress economic performance. "
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    ABSTRACT: Recently, it has been argued that political competition may have similar effects on economic performance as market competition. This study empirically examines this proposition by linking political competition with the Human Development Index (HDI) of the Indian states. The findings suggest that politically competitive governments perform well along the HDI. A more detailed analysis also shows that the rural India benefits the most from the intense political competition as compared to urban India. We also found that if the same government rules a state for a relatively longer period, it helps the state in achieving higher HDI score. Increasing voter participation found to be positively associated with HDI score, but this finding is confined to the sample of major Indian states only. Increasing public spending on developmental activities is also found to have a positive and significant effect on HDI performance. These findings are robust to various forms of sensitivity analyses.
    Full-text · Dataset · Feb 2013
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    • "We will use the normalized Herfindahl index in the empirical analysis. Padovano and Ricciuti (2009), in their analysis on the Italian scenario, used another measure of political competition, that is the electoral margin between the two largest parties. But, as widely explained above, in the meaning of political competition as economic competition an appropriate 10 The first derivative of the normalized Herfindahl index with respect to the number of parties is HHHHH 0 if Herfn n 1 n Herf 1 0 which is always true because Herf < 1. measure of political competitiveness requires the consideration of both the number of parties and their relative size, as the normalized Herfindahl index does. "
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    ABSTRACT: As competition in the economic market yields consumer benefits, political competition is supposed to be welfare-enhancing for citizens in terms promoting competence and good behaviour. Recent literature also underlines its costs, opening the possibility of a non-biunivocal way in which the degree of political competition affects economic growth. The parallel between economic and political competition allows the use of the normalized Herfindahl index as a measure of competition among political parties. Within the Italian regional elections scenario from 1980 to 2008, our findings confirm an inverted-U relationship between the degree of political competition and the regional growth rate. An “optimal” level of political competition allows for a reduction in the trade-off between political accountability and government instability. Moreover, political competition can be used as a “tool” for the growth enhancement of political corruption. However, the question posed by the findings is how to drive political competition to its optimal value.
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