Electoral incentive dynamics, leaders' capability, and economic performance: New evidence of national executives

In this paper, I provide the first cross-country empirical analysis to establish three stylized facts on electoral incentive dynamics, national leaders' capability, and economic performance, using a novel data set of national leaders' personal and tenure characteristics and countries' institutional features: (1) In democracies with (exogenous) term limits, the positive association between leaders' performance and their capability is significantly less pronounced in their last term, when they do not have any re-election incentives; (2) In democracies with term limits, the positive association between leaders' performance and their capability is decreasing over time on average in their entire tenure, but exhibits a jump in the term right before the last term; and (3) The above patterns are more salient in presidential democracies with binding term limits than parliamentary democracies while non-existent in non-democracies where leaders are not appointed via elections. These facts are consistent with a theoretical model of the dynamic decision-making of a politician with re-election concerns.