Working Paper: CEPR ID: DP5985
Authors: Scott Gehlbach; Konstantin Sonin; Ekaterina Zhuravskaya
Abstract: In immature democracies, businessmen run for public office to gain direct control over policy; in mature democracies they typically rely on other means of influence. We develop a simple model to show that businessmen run for office only when two conditions hold. First, as in many immature democracies, institutions that make reneging on campaign promises costly must be poorly developed. In such environments, office holders have monopoly power that can be used to extract rents, and businessmen run to capture those rents. Second, the returns to businessmen from policy influence must not be too large, as otherwise high rents from holding office draw professional politicians into the race, crowding out businessmen candidates. Analysis of data on Russian gubernatorial elections supports these predictions. Businessman candidates are less likely 1) in regions with high media freedom and government transparency, institutions that raise the cost of reneging on campaign promises, and 2) in regions where returns to policy influence (measured by regional resource abundance) are large, but only where media are unfree and government nontransparent.
Keywords: businessman candidates; government transparency; immature democracy; media freedom; political connections
JEL Codes: D72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high media freedom and government transparency (H57) | lower likelihood of businessman candidates (D79) |
| low costs of reneging on campaign promises (D72) | higher likelihood of businessman candidates (D79) |
| high returns to policy influence (D72) | lower likelihood of businessman candidates (D79) |
| strong institutions (D02) | lower likelihood of businessman candidates (D79) |
| weak institutions (O17) | higher likelihood of businessman candidates (D79) |