Electoral systems and economic growth
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Electoral systems and economic growth Diego Aboal1 Received: 25 April 2019 / Accepted: 29 April 2020 © Springer Nature Switzerland AG 2020
Abstract Electoral systems are rules through which votes translate into seats in parliament. The political economy literature tells us that alternative electoral systems can generate different distributions of power among different social groups in the legislature and therefore lead to different equilibrium economic policies. On the other hand, we know from the endogenous economic growth literature that economic policy can affect growth. What the literature is lacking is a clear link between electoral systems and economic growth. The main objective of this paper is to establish a connection between them. Two main results emerge from our model. First, electoral systems matter for economic growth. Second, the way in which they matter is not straightforward. A precise ranking of these political institutions in terms of economic growth requires the knowledge of the distribution of people among different social classes in society. Keywords Electoral systems · Party systems · Social classes · Economic growth JEL Classification O41 · D72 · D78
1 Introduction Electoral systems map citizens’ policy preferences into public policies and public policies affect economic performance. The same preferences under different electoral systems could result in different types of parliaments and therefore, different economic policies and economic outcomes. I would like to thank Michele Boldrin, Alison Booth, Ken Burdett, Nauro Campos, Christian Ghiglino, Victor Lapuente, Abhinay Muthoo, Sebastian Torres and seminar participants at the RSS, University of Essex, and ESNIE 2009, for very helpful comments and suggestions. The usual disclaimer applies. * Diego Aboal [email protected] 1
CINVE, Universidad ORT Uruguay and Universidad de la Republica, 1242 Montevideo, Uruguay
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Economia Politica
This paper develops an endogenous growth model where electoral systems play an important role in explaining economic outcomes. The economic model is a threesector (i.e. three-class) dynastic model with limited altruism where the engine of endogenous growth is public investment (a la Barro 1990). Our political model makes the choice of public investment endogenous, which is something that previous literature on endogenous growth did not, to our knowledge. Two types of electoral systems are allowed: a first-past-the-post majoritarian electoral (M) system and a proportional representation (PR) system. Each of these systems will determine, through pre-electoral and parliamentary games, an equilibrium public policy. The equilibrium public policies (rules) will lead to different growth equilibria. To our knowledge this is the first theoretical attempt to understand how electoral systems affect economic growth. The paper establishes a link between the literature on the effects of different electoral systems on public policy (e.g. Funk and Gathmann 2013; Persson et al. 2007; Persson and Ta
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