Political Competition and Local Social Spending: Evidence from Brazil

Electoral theories of democracy imply electoral competition insures accountability. Using data on local elections, socioeconomic factors, and municipal budgets from more than 5,000 municipalities in Brazil for the years 1996, 2000, and 2004, we find that municipalities with more competitive elections allocate less to social spending compared to municipalities with little political competition. We argue that previous theory on political competition and public goods obscures the critical role that financial resources play in shaping the dynamics of social spending and political competition. Municipalities with small budgets lack the resources necessary to engineer convincing electoral victories. Where resources are negligible, voter turnout is low, and incumbents rarely win reelection. Incumbent parties in municipalities with large financial resources win big. Armed with adequate resources, incumbent parties mobilize voters and win by large margins. This new argument and evidence reconcile contradictory findings in the existing literature on competition and public goods.     

Realising the Public Person

In response to a crisis of representative democracy in many Western countries, (local) governments have introduced instruments to circumvent political parties in order to establish more direct links between citizens and governments. One of these instruments is rendering electoral systems more personal, that is by giving more weight to preferential voting. Preferential voting is important since it constitutes a major element of the personal vote and it determines whether parties or voters are the main decision-makers in designating representatives. We have investigated, in relation to the local elections in Flanders (Belgium), in what kind of municipalities voters are most likely to cast a preferential vote, whether the electoral reform granting voters more power has had an effect, and if it has had an effect, in what kind of municipalities. We have put forward five groups of explanatory variables: socio-demographic, political, social capital, geographic and ballot form variables. Our analysis shows that variables from each group correlate significantly with the percentage of preferential votes, with population density and electronic voting as most important variables. A comparison between the 1994 and 2006 elections often yields the reverse picture: characteristics of municipalities that have a positive effect on the percentage of preferential votes cast have a negative impact on the evolution of preferential voting and vice versa (electronic voting being an exception). This results in the only obvious effects of the electoral reform being seen in urban municipalities, because elsewhere local politics was already to a large extent personalised by politicians being locally known. We could conclude that in these rural municipalities the electoral reform was superfluous.     

The use of intergovernmental grants to municipalities for electoral purposes by subnational governments

Subnational governments devote a significant share of their financial resources to help municipalities provide local public services to their citizens. Compared to the large number of studies on national governments, little effort has been devoted to the influence of distributive politics on the use of intergovernmental grants by subnational governments. To fill this gap, this study uses a data set covering the period 2001–2011 to verify to what extent the Québec government used conditional grants to municipalities for electoral purposes. The results of this study show that the allocation of grants to municipalities is not exempt from electoral politics as municipalities located in districts held by governing parties or in high electoral competition districts receive more grants than other municipalities. However, the influence of electoral politics decreases substantially when the management of intergovernmental grants is under tight scrutiny by the opposition parties, mass media and the population. These findings suggest that distributive politics can be conceptualised as a political agency problem whose prevalence is seriously constrained by the improvement of the transparency of public policies management.     

Economies of scale in Danish municipalities: Expenditure effects versus quality effects

A change in the cost structure in the Danish municipalities seems to have occurred bringing in a larger fixed element in the cost function and making unit costs higher in small municipalities than in large. The paper examines the hypothesis that small municipalities in their reaction to their higher unit costs for management make a trade-off between raising expenditures and the tax level, on the one hand, and reducing the quality of the production, on the other. Using accounting data for 1980, 1990 and 2000 it is shown that the expenditure structure has shifted since 1980 so that small municipalities now exhibit higher unit expenditures than larger municipalities. However, there also seems to be a quality substituting effect in the small municipalities as a reaction to the higher unit costs. From data based on a questionnaire to the chief executives in all municipalities indications of weak political and administrative leadership in the small municipalities are demonstrated. We find that population size and administrative capacity explain significant differences in municipal understanding of the consequences of the central government regulation defining the conditions for the local production of services.     

The African Political Business Cycle: Varieties of Experience

We seek to understand both the incidence and the impact of the African political business cycle in the light of a literature which has argued that, with major extensions of democracy since the 1990s, the cycle has both become more intense and has made African political systems more fragile. With the help of country case studies, we argue, first, that the African political business cycle is not homogeneous, and occurs relatively infrequently in so-called ‘dominant-party systems’ where a pre-election stimulus confers little political advantage. Secondly, we show that, in those countries where a political cycle does occur, it does not necessarily cause institutional damage. Whether it does or not depends not so much on whether there is an electoral cycle as on whether this cycle calms or exacerbates fears of an unjust allocation of resources. In other words, the composition of the pre-election stimulus, in terms of its allocation between different categories of voter, is as important as its size.     

Economies of scale and Brazilian local government expenditure: evidence from the State of Paraná

ABSTRACT

Controversy surrounds local government reform, particularly efforts directed at reducing the number of local authorities to secure economies of scale. We examine whether economies of scale exist in local government outlays by analysing the expenditure of 398 municipalities for the Brazilian state of Paraná using a 16-year panel dataset covering the period 2002–2017. We find evidence that municipal expenditure is characterised by substantial scale economies. However, given the strong correlation between population size and population density, it is important to ascertain whether the influence of population size on municipal expenditure is due to variations in population density or not. When local government areas are divided into sub-groups based on population density, evidence of scale economies remains with the majority of councils operating below optimal size. Municipal consolidations may thus lead to lower per capita expenditure.     

Electoral Cycles And Local Government Debt Management

The literature provides both theories and empirical assessments that link national electoral cycles and opportunistic incumbents' behaviour. However, at the subnational level the literature is scarce. Using a panel of 238 Spanish municipalities over the period 1992–2005, this paper investigates for the first time in Spain whether electoral events contribute to shape municipal debt policies. We show that the electoral cycle influences the municipal debt per capita. Furthermore, both weak (no-majority) and wealthier municipal governments have higher levels of debt per capita. Finally, our data show that the 2001 Spanish Budgetary Stability Law (stemming from the European Stability and Growth Pact) appears to have reduced the electoral effect on municipal debt per capita.     

Size and Local Democracy: the Case of Czech Municipal Representatives

The municipal structure of the Czech Republic experienced a wave of fragmentation after the fall of the communist regime. As a result, most Czech municipalities today have populations of only a few hundred inhabitants. This situation creates specific conditions for the democratic functioning of local representative bodies. In this paper we focus on two features of Czech local government. First, we deal with electoral competitiveness in Czech municipalities; second, we analyse councillors' accountability to voters, their readiness to stand for re-election and their electoral success in successive elections. Based on an analysis of data on individual candidates and elected councillors in four successive terms, we demonstrate that the willingness to stand for election and re-election does not decrease over time; however, the choice among different candidates is limited in the smallest municipalities. Thus, the data show a reduced willingness to stand for re-election and an extraordinarily high chance of re-election in smaller municipalities. This finding weakens the general assumption about higher accountability of elected officials in small municipalities. On a more general level, we conclude that Czech local government has some features of small political systems with infrequent occurrence of major election conflicts.     

What are the Local Political Costs of Centrally Determined Reforms of Local Government?

Taking advantage of a quasi-experimental setting and drawing upon analysis of electoral results and a survey of voters, this article explores the political costs of reform through the example of the 2009 local elections in Denmark. The article finds that the local parties of mayors were punished at the polls for implementing municipal amalgamations decided by the central government. However, the effect on the mayoral parties’ electoral result is more indirect than direct. Analyses of the electoral results demonstrates that the political parties holding the mayoralty in times of amalgamations tend to nominate very tenured mayors as candidates, thereby missing the positive first-term incumbency effect, which a new mayor could have acquired. And analyses of a survey of voters demonstrates higher levels of dissatisfaction with the municipal service in amalgamated municipalities, leading to a higher cost of ruling for mayoral parties which have led the implementation of an amalgamation.     

Political Business Cycle in Taiwan—Evidence from Central Government Expenditures

The political business cycle (PBC) refers to the phenomenon of an incumbent utilizing fiscal or monetary policies to create an economic boom before an election so that periodic fluctuations are induced according to election calendars. This article uses panel data from 1992 to 2010 to examine the effect of presidential elections on central government departmental expenditure in Taiwan. The results suggest an opportunistic PBC in Taiwan after the first Taiwanese presidential direct election in 1996. Furthermore, Taiwan’s government expenditure cycles have been significantly stronger in the years of the “new democracy.”     

Fiscal and political determinants of local government involvement in public-private partnership (PPP)

ABSTRACT

In this article, we estimate the main determinants of local government’s engagement in public-private partnership (PPP) projects using logistic panel regression. We use data from 2478 municipalities and cities in Poland from 2009 to 2016. The results show that municipalities with higher levels of indebtedness have a higher probability of opening PPP tenders while local units that are more dependent on central grants or receive more European grants are less engaged in PPP. We also found that the mayors of municipalities and cities with stronger electoral competition engage in PPP with a higher probability. These results are important for discussions on the efficient use of PPP. They show that local government decisions made in conditions of fiscal constraint and political struggle can blur the PPP’s value-for-money aim.     

The Electoral Dynamics of Human Development

This paper analyses the impact of elections, partisan and political support effects on the dynamics of human development in a panel of 82 countries over the period 1980–2013. A Generalised Method of Moments(GMM) estimator is employed and the results point out to the presence of an electoral cycle in the growth rate of human development. Majority governments also influence it, but no evidence is found regarding partisan effects. The electoral cycles have proved to be stronger in non-OECD countries, in countries with less frequent elections, with lower levels of income and human development, in presidential and non-plurality systems and in proportional representation regimes.     

Electoral Risk and Redistributive Politics in Mexico and the United States

What strategy does a rational party follow in allocating discretionary expenditure? This article conceives redistributive politics as an investment strategy where expenditure allocations respond to electoral risk. To show the effects of risk, it provides evidence from Pronasol in Mexico and an analysis of New Deal spending in the United States. The analysis finds that the federal administrations in both countries responded to systematic electoral risk. Spending diversification into risky voters was a rational response to chances of losing elections. The analysis hence connects electoral volatility with redistributive spending.     

The Influence of Direct Democracy on Political Interest,Electoral Turnout and Other Forms of Citizens’ Participation in Swiss Municipalities

Based on the data of a survey conducted among Swiss municipalities, this article inquires into the relationship between different institutional settings of local democracy and the amount of political interest of citizens as well as electoral participation and new forms of citizen participation like participatory planning or local agenda 21. The study identifies six distinct settings of local democracy in Switzerland, ranging from pure direct democracy to representative democracy. The analysis shows that the institutional setting of local democracy has no impact on the political interest of the citizens. It also reveals that instruments of direct democracy do not significantly weaken representative democracy as far as electoral participation is concerned. New forms of citizen participation are predominantly used alongside with means of direct democracy.     

Do Electoral Risks Moderate the Effect of Partisan and Electoral Cycles on Debt-Financed Local Spending?

Governments’ use of debt as a political instrument has been widely studied from the perspective of partisan and electoral cycles, mainly concerning central government. On the whole, previous studies have attempted to determine the effects of political ideology and the proximity of elections on the opportunistic use of public spending. The current study aims to broaden the scope of attention to the effect of partisan and electoral cycles on debt, by means of a broader consideration of the motives that lead politicians to take on a deficit and that are usually linked to the associated electoral risk. More particularly, we examine whether, during the electoral period, greater confidence in re-election can modify party behaviour concerning the use of public spending, and if so, whether the change is greater or smaller depending on the ruling party’s ideology. The results obtained show that local administrations need to incur debt, although politicians take on more liability than is appropriate to their demographic and economic characteristics, especially in an election year. It was also found that political stability favours a reduction in the public deficit, a pattern that is maintained in electoral periods. This effect was found to be independent of the partisan cycle.     

Effects of municipal mergers on voter turnout

We study the effects of municipal mergers on voter turnout in a difference-in-differences framework, using data from a wave of municipal mergers in Finland in 2009. Analysing two pre-merger elections and three post-merger elections, spanning a total of 17 years, we find that municipal mergers decrease voter turnout by 4 percentage points in the long run in the relatively small municipalities compared to similar small municipalities that did not merge. As the average turnout rate prior to merging in this group was around 69%, this is a substantial effect. We also find that virtually nothing happens to turnout in the municipalities that were relatively large within their merger. Furthermore, mergers are associated with a decrease in voters’ political efficacy and turnout decreases more in those municipalities that experience larger decreases in efficacy.     

Between Decisiveness and Credibility: Transforming the Securities Industry in Singapore and Thailand

This article suggests a political party-centred explanation of economic policy reforms that differs significantly from the standard theoretical models that emphasise social coalitions, government systems, regime types or electoral cycles. The explanatory approach advanced here focuses on inter-party and intra-party organisational dimensions within an integrated analytical framework as the major determinants of both the decisiveness of policy reforms and the credibility of such reforms. A comparative analysis of government efforts to transform the securities industry in Singapore and Thailand provides preliminary evidence with which to explore the proposed causal linkage between the patterns of stock market reforms and the changing configurations of political parties.     

Do the illegal and legal rents of politicians affect municipal election outcomes? Empirical evidence

This paper aims to analyse whether illegal (corruption) and legal rent extraction (high politicians’ wages) affect electoral outcomes at municipal level. We use an initial sample of 145 Spanish municipalities over 50,000 for two electoral periods: 2004–2007 (before the crisis) and 2008–2011 (during the crisis). Our findings show that neither illegal nor legal rent extraction impact on re-election in non-crisis times. However, we observe that citizens penalize legal rent extraction in the ballots during the crisis. Regarding the economic performance of the local governments, we find that its effect on re-election is important in non-crisis period. Nevertheless, in time of crisis, given that the economic situation is bad in general in the country, voters pay less attention to economic factors and focus on politicians’ behaviour.     

Exchange Rate Regime,Central Bank Independence,and Political Business Cycles in Brazil

This article examines policy consequences of electoral cycles and exchange rate regime choices in Brazil. The literature on opportunistic political business cycles maintains that governments adopt expansionary economic policies before elections to mobilize voters’ support. However, research findings in Latin America based on the theory has been inconclusive. I argue that the lack of conclusive evidence in Latin America stems from measurement errors common in the use of cross-national aggregate data. Using Brazil’s monthly data from 1985 to 2006, this article shows that there are electorally induced fiscal cycles under fixed and crawling peg exchange rate regimes and electorally induced monetary cycles under floating exchange rates only when the nation’s central bank is not independent. Indeed, accounting for Brazil’s unique economic contingencies and longitudinal variations in the de facto central bank independence, its public policy behavior remarkably resembles that of the more affluent, economically stable OECD countries.

How do municipal amalgamations affect turnout in local elections? Insights from the 2015 municipal reform in the Austrian state of Styria

In this paper, we evaluate the effect of municipal amalgamations on election turnout in local elections. Following recent studies, we argue that municipal mergers can lead to less information about the election being made available to citizens and less influence for individual voters. That is, while citizens in the local context usually rely on their own direct contacts in local offices and among political candidates, the subsequent increase in population size due to a merger reduces opportunities for establishing such contacts and for having decisive influence on political decisions. Consequently, voters are less informed and less engaged, resulting in lower levels of electoral turnout in local elections. We test our argument empirically by using aggregate level data from the municipal level from the 2010 and 2015 local elections in Styria, Austria, which followed the amalgamation of some, but not all, municipalities in January 2015. The empirical results support our argument.