Download The Economic Growth Effect of Constitutions Revisited

The Economic Growth Effect of
Constitutions Revisited
Presentation for Political Economics Reading Group
20/4 2009
Carl Henrik Knutsen
Problem questions and main results

Does form of government (presidentialism vs
parliamentarism) affect growth in GDP per capita?

Does electoral system (plural-majoritarian vs
proportional representation) affect growth in GDP per
capita?
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Main empirical results:
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Form of government does not seem to have any systematic
effect
PR (and semi-PR) systems affect growth positively when
compared to plural-majoritarian
Structure paper
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Introduction
Theoretical survey form of government and growth
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Theoretical survey electoral rules and growth
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Including earlier empirical results
Data and empirical analysis
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Including earlier empirical results
OLS with PCSE, RE, FE
Matching
2SLS
Conclusion
Motivation

Real world importance: Constitutional engineering and reengineering.

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Historically, much debate on political consequences
Some examples
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US constitution, Federalist Papers, fear of tyranny and power
concentration
Presidentialism in Latin America, political gridlock and breakdown
The Weimar Republic, PR and the triumph of Hitler
Norway, minority governments, “chaos” and the need for plurality rules?
Economic consequences?
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Not well understood (historically)
Lack of good models, but also: multiple mechanisms and aggregation
Person and Tabellini’s research program
Presidentialism, parliamentarism and
growth
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Checks and balances, more veto players under presidentialism
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Other arguments in favor of parliamentarism
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(+) reduces opportunity for predatory behavior (e.g. expropriation)
(?) Reduces size of the public sector
(-) rigidity and lack of reform
(-) special interests and side payments to veto players
Party discipline, party strength and coordination under
parliamentarism; the vote of confidence.
Personification of politics under presidentialism
Earlier studies:
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+parliamentarism: Gerring et al (2009), Persson (2005)
+parl.: (in low quality democracies only) P&T (2003)
+pres.: P&T (2006)
Electoral systems and growth
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Plurality rules and accountability (relation seats and votes,
fewer coallition governments, smaller districts, individual
candidate voting)
PR and autonomy of politicians from narrow interest groups
(pork barrel, protectionism, property rights protection)
PR and stability/credibility of policy (changes in seats and
alternation of government, coallition governments)
Earlier empirical studies: P&T (2003 and 2006), Persson 2005.
+effect from PR on trade liberalization, property rights and
good economic institutions, but effect on growth not robust
Data
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Dep. variable: GDP per capita growth from Maddison
(2006)
Form of govt and electoral rules from Schjølset (2008)
Controls: Federalism, log GDP pc, log population, log
regime duration, degree of democracy, ethnic
fractionalization, colonizer, region, plurality religion,
fraction English and other major European language
speakers, latitude, Frankel-Romer trade instrument,
decade dummies
Time frame: 1820-2002
Empirical analysis
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Main result: 1% (+) extra GDP per capita growth from PR,
no effect from form of government. Significant effect from
PR (and semi-PR), except for 2SLS.
OLS with PCSE
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Robustness checks, countries
Presidentialism and negative effect in temporally constrained
sample
RE and FE, constitutional inertia and inference
Matching
2SLS (large standard errors, point estimates, hausman
tests)
Conclusion
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No effect from form of government
The “gentler, milder form of democracy” related to PR
rules is not only better for representation of diverse
groups in politics and congruence between government
and median voter, but also for economic growth.