Is there an optimal level of political competition in terms of economic growth? Evidence from Italy

Alfano, Maria Rosaria; Baraldi, Anna Laura

doi:10.1007/s10657-012-9340-5

Cited by 29 publications

(24 citation statements)

References 34 publications

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“…Acemoglu et al., ). Institutional theory predicts that political development is a precondition for economic growth (Acemoglu et al., ; Alfano & Baraldi, ). Although clearly political–economic development clearly coevolves through time, existing studies clearly differ regarding which component serves as the catalytic device for understanding the nature of this coevolution.…”

Section: Resultsmentioning

confidence: 99%

“…These long-run benefits associated with rising partisan competition on economic performance dissipate in the post-Republican realignment era as it declines by a factor of 5.37, and is also no longer statistically discernible from zero at conventional levels of significance. 18 An alternative conjecture is that economic development benefits only accrue from moderate levels of political competition due to ceiling effects arising from the diminishing marginal impact of competitive political parties (Alfano & Baraldi, 2015;Besley, Persson, & Sturm, 2010). Such potential ceiling effects arise from the fact that many partisan competition observations contain values close to the upper limit of this variable and hence may raise concerns about the validity of our empirical findings.…”

Section: Us Regionsmentioning

confidence: 94%

“…An alternative conjecture is that economic development benefits only accrue from moderate levels of political competition due to ceiling effects arising from the diminishing marginal impact of competitive political parties (Alfano & Baraldi, ; Besley, Persson, & Sturm, ). Such potential ceiling effects arise from the fact that many partisan competition observations contain values close to the upper limit of this variable and hence may raise concerns about the validity of our empirical findings.…”

Section: Statistical Findingsmentioning

confidence: 99%

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Understanding political−economic development in the American South

Krause

Zarit

2019

Economics & Politics

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We propose an empirical strategy to adjudicate between competing explanations of political–economic development in the American South. This strategy evaluates the dynamic relationship between partisan control of representative institutions and economic performance, both before and after major partisan realignment forces and economic conditions had structurally transformed the American South. The political–economic development of low‐capacity Southern states since the early 1980s reflects a “virtuous cycle” of rising income growth and partisan balance of state legislatures mutually reinforcing one another. These findings reconcile conflicting claims regarding the catalytic nature of political–economic development coevolution in the American South and have broader implications for the study of comparative political–economic development.

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Section: Resultsmentioning

confidence: 99%

Section: Us Regionsmentioning

confidence: 94%

Section: Statistical Findingsmentioning

confidence: 99%

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Understanding political−economic development in the American South

Krause

Zarit

2019

Economics & Politics

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“…As for competition within the legislative and the executive, he shows some evidence favouring an inverted U‐shape at low levels of political competition, but at the same time, he points out that the type of non‐linearity partly differs across the measures of political competition. The third one is that of Alfano and Baraldi () who tested a quadratic model of political competition and economic growth on the 20 Italian regions over years, finding that an intermediate level of political competition allows for the reduction of the trade‐off between political accountability and both government instability and the incentive of politicians to promote pork‐barrel policies.…”

Section: Introductionmentioning

confidence: 99%

Democracy, Political Competition and Economic Growth

Alfano¹,

Baraldi²

2016

J. Int. Dev.

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Democracy can take different forms and expressions among cultures and societies around the world, and, therefore, it can be characterised by different degrees. Accordingly, we asked how the degree of democracy affects economic growth. We choose the degree of political competitiveness among political parties as measure of the degree of democracy. We estimates cross-country panel data non-linear empirical growth model, taking into account the endogeneity of political competition through a new instrumental variable. The relationship between political competition and growth appears as an inverted U, and it is robust to the use of different political competition measures and to the short and long run analysis. This result allows us to calculate an 'optimal' level of political competition that maximises economic growth, which corresponds to a sufficient level of competition in the political vote market. We believe that this result emerges from the trade-offs generated by the various channels through which different levels of democracy (as those of political competition) affect growth. by presenting evidence of robust and sizable positive effects of democracy on economic growth.Democracy is more than just a set of specific government institutions. It rests upon a well-understood group of values, attitudes and practices, all of which may take different forms and expressions among cultures and societies around the world; democracies are based on fundamental principles, not uniform practices. This means that democratic countries over the world are characterised by different degrees of democracy. Therefore, the question to be asked is about the shape of the relationship between the degree of democracy and the level of economic growth. In other words, could this relationship be non-linear? This question arises from the analysis of a recent body of literature which supports a non-linearity of the effects of democracy on economic growth. Even in this branch of literature, two conflicting approaches to non-linearity emerge: the U-shape and the inverse U-shape of the effect of democracy on growth.In order to answer this important question, we need a measure for the level of democracy. We can find it by following the definition of democracy that the relevant literature proposes. According to Tavares and Wacziarg (2001, p. 1342), democracy is defined as 'a body of rules and procedure that regulates the transfer of political power and the free expression of disagreement at all levels of public life '. Schumpeter (1942) defines democracy as the political regime in which rulers are selected through free and contested elections; that is, democracy is a regime in which incumbents who lose elections must leave office. By these definitions, the right to form political parties and the freedom of political competition are the features that characterise better the level of democracy. Therefore, the degree of political competitiveness among political parties at elections appears to be an appropriate way of measuring the degree of democracy o...

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“…15 The first derivative of the normalized Herfindahl index with respect to the number of parties is ∂NHI/∂n = ((Herf(n − 1 − (n × Herf − 1))/(n − 1) 2 ) > 0 ifHerf(n − 1) − (n × Herf − 1) > 0, it is always true because Herf < 1 Alfano and Baraldi (2012). provide a wide description of the properties of the normalized Herfindahl index and of some characteristics which are essential for the analysis that is being conducted and therefore justifying this choice with respect to the standard Herfindahl index.…”

mentioning

confidence: 99%