Electoral competition and the party politics of public investments

Abstract

When do political parties propose long-term investments? Electoral competitiveness should be a key variable explaining parties’ investment priorities: parties can be less responsive to voters’ short-term priorities and overcome time inconsistencies when they are more likely to win the next election. The article distinguishes the characteristics of three types of investments in education, environmental protection and technology and infrastructure, gathered from the Comparative Manifesto Project. It finds a linear positive relationship between parties’ probability of entering office and the proportion of manifestoes allocated to statements about technology and infrastructure. In contrast, statements about education are highest at high levels of electoral competitiveness, as parties propose more education to attract voters, while statements about the environment are affected by parties’ ideology on the left-right axis rather than by electoral competitiveness. Power-sharing institutions help parties to overcome time inconsistency problems, reducing the impact of electoral competition on investments.

Investing in the knowledge economy: The comparative political economy of public investments in knowledge‐based capital

“…I also find that austerity has a negative effect on investment spending. However, I do not find evidence that partisan factors (still) play an explanatory role, which is in line with most of the recent literature (Garritzmann & Seng, 2016; Jacques, 2021; Ronchi, 2018). These findings matter as they highlight the importance of institutionalized compensation and collaboration between different actors in overcoming obstacles to successful long‐term policy making –obstacles that appear in similar form in climate policy making or pandemic preparedness, for example (cf.…”

“…I find strong support for my argument that corporatist institutions, by fostering a collaborative style of policy making, are a central yet so far largely overlooked factor in explaining cross‐country variation in investment policies (again, for exceptions, see Finnegan, 2022; Jacques, 2021). Moreover, corporatist institutions seem to moderate the relationship between deindustrialization and knowledge investments in that the impact of deindustrialization on investments varies across levels of corporatism as well as over countries more generally.…”

“…While power‐sharing institutions seem to make parties prioritize investments in their manifestos (Jacques, 2021), they do not increase investment spending independent of the effect of corporatism. This is evidence in favour of H2b.…”

“…On the one hand, institutions that disperse and fragment power have been argued to increase investment by incentivizing politicians to maintain commitments (Jacobs, 2016, p. 445; Lindvall, 2017) and by diffusing the blame for short‐run costs ((Jacobs, 2016), p. 444). Building on these arguments, (Jacques, 2021, p. 2) finds that power‐sharing institutions such as proportional electoral systems or corporatist interest group mediation can help ‘break political uncertainty about future investment by “locking in” commitments’ and thereby strengthen the capacity of governments to overcome intertemporal trade‐offs (Jacques, 2021, p. 2). On the other hand, ‘cooperative institutions’ that ‘promote cooperation among economic actors’ allow for credibly compensating actors for the short‐term costs of investments while credibly involving them in their long benefits (Hicks & Kenworthy, 1998, p. 1634).…”

“…Building on the literature on power sharing (Jacques, 2021; Lindvall, 2017) and cooperation‐inducing institutions (Hicks & Kenworthy, 1998; Katzenstein, 1985; Ornston, 2013), I argue that corporatist institutions can be expected to alleviate not just cross‐sectional but also intertemporal trade‐offs and thus increase long‐term investments (Finnegan, 2022). Specifically, I argue that corporatist institutions foster a more collaborative style of policy making as well as a sense of ‘“shared ownership” of policy problems [and a] general capacity to adapt’ (Hemerijck and Schludi, 2001, p. 227) that allows corporatist countries to overcome the cross‐sectional and intertemporal trade‐offs associated with making policies for the long run.…”