Businessman Candidates

Abstract

Why and when do businessmen run for public office rather than rely upon other means of influence? What are the implications of their participation for public policy? We show formally that "businessman candidacy" and public policy are jointly determined by the institutional environment. When institutions that hold elected officials accountable to voters are strong, businessmen receive little preferential treatment and are disinclined to run for office. When such institutions are weak, businessmen can subvert policy irrespective of whether they hold office, but they may run for office to avoid the cost of lobbying elected officials. Evidence from Russian gubernatorial elections supports the model's predictions. Businessman candidates emerge in regions with low media freedom and government transparency, institutions that raise the cost of reneging on campaign promises. Among regions with weaker institutions, professional politicians crowd out businessmen when the rents from office are especially large

The perfect finance minister: Whom to appoint as finance minister to balance the budget

“…Besley (2005) discusses the self-selection of politicians as another source of endogeneity when he suggests that high opportunity costs make it unlikely that business people engage in politics in developed societies with a booming private sector. Gehlbach, Sonin, and Zhuravskaya (2010) have an even more pessimistic view. They take 'businessman candidacy' as an indicator for weak institutions and as a mean to avoid the cost of lobbying in immature democracies.…”

The Productivity Consequences of Political Turnover: Firm-Level Evidence from Ukraine's Orange Revolution

“…During the latter years of his reign, Kuchma utilized these powers in return for the support of a narrow business elite drawn primarily from the ethnically Russian east of the country. 4 As in other postcommunist countries (Gehlbach, Sonin and Zhuravskaya, 2010), the influence of these business groups was cemented through representation in official government positions: using data that we describe further below, Gorodnichenko and Grygorenko (2008) report that in 2002 over one-quarter of large firms in eastern Ukraine belonged to a business group with a representative in parliament or government, far in excess of the ratio elsewhere.…”

Public Employees as Politicians: Evidence from Close Elections

“…8 For studies on party effects in the U.S. context, see Ferreira and Gyourko (2009), Gerber and Hopkins (2011) and de Benedictis-Kessner and Warshaw (2016). The effects of the political representation of other non-partisan interests groups, such as women, minorities and occupation groups, on policy outcomes are studied by, for instance, Pande (2003), Chattopadhyay and Duflo (2004), Gehlbach, Sonin, and Zhuravskaya (2010), Ferreira and Gyourko (2014), Matter and Stutzer (2015) and Bagues and Campa (2017). Gagliarducci and Nannicini (2013) and Freier and Thomasius (2016) study the effects of politicians' qualifications on fiscal outcomes.…”