Using data for a panel of 62 partly to fully democratic countries in the period 1984–2008, we provide evidence that political persistence (measured as the longest tenure in office of main political entities) is negatively associated with growth, after controlling for country and time fixed effects, and that this association is stronger in countries with low bureaucratic quality, where the cost of red tape is high. This evidence can be rationalized by means of a growth model with quality improvements where political connections with politicians can be exploited by low-quality producers to mitigate red tape costs, defend their monopoly position and prevent entry of higher-quality competitors. The model implies a negative relationship between persistence in office of politicians and economic growth in high red-tape countries, while no association is expected where red tape costs are low.

Giorgio Bellettini, Carlotta Berti Ceroni, Giovanni Prarolo (2013). Political persistence and economic growth. EUROPEAN JOURNAL OF POLITICAL ECONOMY, 31, 165-179 [10.1016/j.ejpoleco.2013.05.002].

Political persistence and economic growth

BELLETTINI, GIORGIO;BERTI CERONI, CARLOTTA;PRAROLO, GIOVANNI
2013

Abstract

Using data for a panel of 62 partly to fully democratic countries in the period 1984–2008, we provide evidence that political persistence (measured as the longest tenure in office of main political entities) is negatively associated with growth, after controlling for country and time fixed effects, and that this association is stronger in countries with low bureaucratic quality, where the cost of red tape is high. This evidence can be rationalized by means of a growth model with quality improvements where political connections with politicians can be exploited by low-quality producers to mitigate red tape costs, defend their monopoly position and prevent entry of higher-quality competitors. The model implies a negative relationship between persistence in office of politicians and economic growth in high red-tape countries, while no association is expected where red tape costs are low.
2013
Giorgio Bellettini, Carlotta Berti Ceroni, Giovanni Prarolo (2013). Political persistence and economic growth. EUROPEAN JOURNAL OF POLITICAL ECONOMY, 31, 165-179 [10.1016/j.ejpoleco.2013.05.002].
Giorgio Bellettini;Carlotta Berti Ceroni;Giovanni Prarolo
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/152084
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