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Political Persistence, Connections and Economic Growth

Author

Listed:
  • Giorgio Bellettini

    (University of Bologna)

  • Carlotta Berti Ceroni

    (University of Bologna)

  • Giovanni Prarolo

    (University of Bologna)

Abstract

Using data on a panel of 56 democratic countries in the period 1975-2004, we find evidence of a negative association between political stability and economic growth which is stronger and empirically more robust in countries with high bureaucratic costs. Motivated by these results, which contrast with previous contributions, we develop a model of growth with quality improvements where political connections with long-term politicians can be exploited by low-quality producers to defend their monopoly position and prevent innovation and entry of high-quality competitors. This requires that the incumbent politician remains in office and that the red-tape cost advantage granted by political connections is large relative to the quality upgrade related to innovation. Consistently with our empirical findings, the model delivers a negative association between the probability that the incumbent politician remains in office and average economic growth in the presence of high bureaucratic costs.

Suggested Citation

  • Giorgio Bellettini & Carlotta Berti Ceroni & Giovanni Prarolo, 2009. "Political Persistence, Connections and Economic Growth," Working Papers 2009.107, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2009.107
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    References listed on IDEAS

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    2. Vincenzo Atella & Lorenzo Carbonari, 2017. "Is gerontocracy harmful for growth? A comparative study of seven European countries," Journal of Applied Economics, Universidad del CEMA, vol. 20, pages 141-168, May.
    3. Daeheon Choi & Chune Young Chung & Soon-Ihl Samuel Hong & Jason Young, 2020. "The Role of Political Collusion in Corporate Performance in the Korean Market," Sustainability, MDPI, vol. 12(5), pages 1-18, March.
    4. Atella, Vincenzo & Carbonari, Lorenzo, 2012. "When elders rule: is gerontocracy harmful for growth?," MPRA Paper 36574, University Library of Munich, Germany.

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    More about this item

    Keywords

    Political Persistence; Growth; Innovation;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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