The impact of electoral rules on manufacturing industries: evidence of disaggregated data of 61 industries of 55 countri
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The impact of electoral rules on manufacturing industries: evidence of disaggregated data of 61 industries of 55 countries Timothy Yu‑Cheong Yeung1 · Izaskun Zuazu2
© Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract Electoral rules are found to induce different incentives to politicians and have various effects on the economic performance of countries. The literature is however silent on whether this effect is homogeneous across industries within a country. This paper argues with an analytical model that an incumbent government under majoritarian rules tends to favour larger industries so as to secure votes from the employees and relatives of those industries. By constructing and exploiting an original dataset that covers disaggregated data on output growth of 61 industries in 55 countries, we find that larger industries in terms of employment size grow slower than smaller ones under non-majoritarian electoral rules, but such a correlation is absent under majoritarian rule. This result is robust across different regression models and could well be explained by favouritism of governments towards larger industries. Keywords Electoral rules · Manufacturing industry growth · Industry size · Disproportionality · Special interest groups JEL Classification D72 · H11 · L60
1 Introduction This paper investigates whether electoral rules determine the economic performance of manufacturing industries, and whether this effect is heterogeneous across industries within an economy. Electoral rules convert votes into political representatives * Timothy Yu‑Cheong Yeung [email protected] Izaskun Zuazu izaskun.zuazu‑bermejo@uni‑due.de 1
KU Leuven, Leuven, Belgium
2
University of Duisburg-Essen, Duisburg, Germany
13
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T. Y.-C. Yeung, I. Zuazu
in different manners and, therefore, provide different incentives to incumbent governments to react to different groups of voters. Electoral rules in legislative elections characterize two broad electoral systems: majoritarian electoral systems (MR, hereafter) and proportional representation systems (PR, hereafter). The adoption of alternative electoral systems (Boix 1999; Benoit 2004; Colomer 2016; Yeung 2017) and their political consequences (Lijphart 1990; Norris 2004) have long been studied in political science. Along similar lines, the economic implications of electoral rules have also attracted scholarly attention (Rodrik 1996; Persson et al. 2003; Knutsen 2011). Yet there is no robust consensus on which type of electoral rule is more conducive to economic growth.1 The mechanism linking the electoral rule a country adopted to the overall macroeconomic growth is complex, intertwined with many other factors. Theories and evidence at the macroeconomic level are thus nonetheless weak. Our work instead provides a theoretical link between electoral rules and incentive to favour certain industries and empirical evidence using an original industry-level dataset. In the literature, the electoral rules in place are found to affec
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