رقابت سیاسی، مشارکت انتخاباتی و دارایی های عمومی در امریکا لاتین قرن 20

Rational choice models predict that political competition and political participation have opposite effects on the size of government. We investigate these theories using data from a panel of 18 Latin American countries during the 20th century. Our research builds evidence for the prediction that reforms enhancing political competition tend to limit the size of government, while reforms increasing political participation tend to increase the size of government. Furthermore, we find that reforms which remove literacy requirements from franchise laws are associated with governmental expansion, while changes in women's suffrage laws have no impact on the size of government. Our findings demonstrate the empirical relevance of the distinction between political competition and participation.

The role of political institutions as the drivers of specific policy choices and more profoundly, as determinants of economic development, has been the subject of intense theoretical and empirical investigation in recent years (e.g., Acemoglu & Robinson, 2006, Boix, 2003, Persson & Tabellini, 2003 and Klomp & de Haan, 2009). At least since Dahl (1971), the idea that political institutions are pivotal players in ensuring economic and social outcomes has enjoyed widespread support. Yet, explaining how political institutions wield their influence has remained a nebulous endeavor. We know that institutions regulate the exact parameters of citizenship rights, determining who votes and how. We know that institutions regulate the degree of competition among factions for political power. And we know that institutions determine the autonomy of the legislature and court system. What we don't understand fully is how the different design of these political institutions impact economic and social outcomes. Crucial to building more clarity in our understanding of these fundamental issues is the distinction between electoral participation and political competition. This distinction is implicitly or explicitly embodied in many definitions of democracy (e.g., Powell, 1982 and Przeworski et al., 2000) but is also employed in analysis of broader regime types, as demonstrated, for example, by Wintrobe's work on dictatorships (Wintrobe, 1998). Electoral participation and political competition also figure prominently in theoretical research. In Meltzer and Richard (1981), for example, the political inclusion of hitherto disadvantaged or disenfranchised groups is shown to increase the demand for distributive public spending and to expand the size of government. A contrasting view is provided by Becker, 1983 and Wittman, 1989 who stress the role that political competition plays in limiting the size of government. This paper builds new empirical evidence on these theoretical propositions. We show that electoral participation and political competition have very different implications for the size of government and for the tax structure. We contribute to the existing empirical literature, which isolates the effects of either political competition or electoral participation,2 by studying the two dimensions jointly. The setting for our study is the particularly fecund political climate of Latin America. Indeed, 20th century Latin America provides an almost perfect laboratory for testing hypothesizes about political institutions. For example, since independence, Peru has changed or modified its constitution 13 times; Chile has modified its constitution 11 times, while Brazil and Colombia have made 8 and 12 changes, respectively. These institutional fluctuations not only reflect shifts in the allocation of voting rights and thereby the scope for electoral participation; but, they indicate repeated vacillations between highly competitive democratic environments and highly autocratic or dictatorial environments with severely limited competitive frameworks. These factors make Latin America an ideal political terrain for exploring through statistical assessment the impact of electoral participation and political competition on fiscal outcomes, in particular on the size of government and on the tax structure. Our study is two-pronged, first estimating the impact of different competitive and participatory frameworks on fiscal outcomes. Our second objective is to go into more detail about restrictions on electoral participation and to study the impact of electoral literacy requirements and women's suffrage limitations. We believe exploring the outcome of these transitions statistically makes contributions to the ongoing debate about the role of political institutions, and provokes urgent questions about institutional and electoral design. However, we acknowledge the importance of peculiar, local specificities demonstrated in the histories of the 18 countries we study. Literacy requirements were the most obdurate of Latin American electoral restrictions. By the late 19th century, most countries in Latin America were at least nominally democracies, but with much more restricted voting franchise requirements than, for example, the USA and Canada (Engerman and Sokoloff, 2005). Restrictions could include wealth or income requirements, but most frequently, laws contained literacy qualifications. While most wealth or income requirements were abolished in the late 19th and early 20th century, literacy requirements remained in place in some countries until the 1980s (Engerman et al., 1998). In countries such as Peru, Bolivia and Ecuador, which have sizable, predominant Native American populations with high levels of illiteracy, these restrictions likely served the purpose of keeping an elite in control, and excluding the massive marginalized population from political influence. In a political climate of such divisive restrictions, we build statistical explanations to show how literacy tests restricting the franchise effected fiscal outcomes. Suffrage restrictions also excluded vast portions of the population from the electoral process well into the 20th century by virtue of their gender. The first country to grant women the right to vote was Ecuador in 1929, followed by Uruguay and Brazil in 1932. Nearly three decades later, Paraguay followed suit in 1961. Restrictions on female participation in the political process in other contexts, e.g., the USA (Lott and Kenny, 1999) and western Europe (Aidt and Dallal, 2008) have been found to affect fiscal outcomes. We examine if similar patterns can be found in Latin America. Our analysis is based on a panel data set with information on fiscal outcomes (for central government) in 18 Latin American countries for the period 1920 to 2000. We employ the Polity IV index to measure political competition (Marshall and Jaggers, 2007), and turnout in elections and referenda to measure electoral participation (Vanhanen, 2000 and Vanhanen, 2003b). These choices allow us to track political reforms over long periods of time and exploit the often substantial variation in electoral participation and political competition within the 18 Latin American countries. The Polity IV index is sometimes interpreted as a measure of democracy more generally, but, as we shall detail in Section 2, a careful reading of the Polity IV manual suggests that it is more accurate to interpret it as a measure of political competition. Many studies, e.g., Boix, 2003, Mulligan et al., 2004, Persson & Tabellini, 2006 and Kenny & Winer, 2006 use a “world” sample that includes as many countries as possible to study the link between fiscal structures and political institutions. The advantage of this is that the variation in institutional differences is maximized, but at the same time, countries included in a world sample represent very different economic, geographical, social and cultural experiences. We believe that the focus on Latin America has the advantage of making the sample more homogenous, as these countries share common cultural and linguistic roots. We draw three main conclusions from our analysis. First, our fixed effect estimates strongly support the hypothesis that electoral participation and political competition have opposite effects on the size of government. A country that instigates reforms enhancing political competition experiences a fall in government expenditure and taxation in percentage of GDP in the order of 1.7–2.0 percentage points. In contrast, a country that, through franchise reform or otherwise, experiences an increase of 50% of the population who can participation in elections, subsequently witnesses an increase in government expenditure and taxation as a percentage of GDP by approximately 2.0–2.3 percentage points. Second, we find indirect evidence that part of the reduction in the size of government associated with enhanced political competition can be attributed to a reduction in spending on securing and maintaining authority. In short, in environments bereft of political competition, we suggest direct costs are incurred to the government by the elite's attempt to maintain power and control, be it through military or policing measures. Once a more pluralistic, competitive political environment is achieved, the costs of repression diminish. Third, we find that much of the increase in government size due to heightened electoral participation can be attributed to reforms which eliminate literacy tests. Women's suffrage, in contrast, appears to have no significant impact on the size of government in Latin America. The paper is organized as follows. In Section 2, we introduce the distinction between political competition and electoral participation, deriving testable implications from theoretical literatures and discussing how we obtain operational measures of political competition and electoral participation. In Section 3, we present our data on the size of government, discuss the econometric specification, and present the main results. In Section 4, we refine our measure of electoral participation by explicitly incorporating franchise reforms (removal of literacy tests and women's suffrage) into the analysis. In Section 5, we briefly discuss other results that emerge from the analysis. In Section 6, we provide concluding remarks and discuss the issue of causality in detail. Appendix A contains a detailed discussion of data and sources.

Our analysis demonstrates the empirical relevance of the distinction between political competition and electoral participation for the size of government. This finding has implications, not only for our understanding of the forces behind growth in government, but also more broadly for quantitative research on political institutions. Firstly, while in many contexts and for many research questions it may make sense to construct composite indicators of democracy that combine aspects of participation with aspects of competition (Przeworski et al., 2000, Vanhanen, 2000 and Boix, 2003), one should not overlook the fact that this may conceal important insights because the constituent components can have offsetting effects. As pointed out by Persson and Tabellini (2006), the devil may well be in the details. Secondly, recent research within the political economics literature (e.g., Mulligan et al., 2004 and Rodrik & Wacziarg, 2004) tends to interpret the Polity IV index as an index of democracy or changes in the index as a measure of democratization. We have argued that the index is better interpreted as an index of political competition. Political competition is surely one aspect of democracy, but most definitions would also refer to some notion of electoral participation (e.g., universal suffrage) and civil liberties; surely there is more to democracy than political competition. In short, the main contribution of this paper lies in using a two-dimensional metric to characterize political regimes and in establishing a very robust set of relationships between political competition and electoral participation, on the one hand, and fiscal outcomes, on the other, that go in opposite directions. Even if one questions whether our results are causal, they continue to be of substantial interest, for as Acemoglu (2005) notes, “even non-causal robust relationships are rare in comparative political economy”. But are the results casual? This is the ultimate challenge for all empirical research on the link between political institutions and fiscal outcomes. In order to identify a causal effect running from institutions to fiscal outcomes, the observed variation in the institutional arrangements must be exogenous to the process that determines the fiscal outcomes. In practise, this often fails. One possible reason is that political reforms might be driven by the same unobserved factors that determine fiscal choices. Another reason is reverse causality: Political reforms could be driven by fiscal considerations.36 In our context, such problems might arise if, for example, as argued by Acemoglu et al. (2005), the ruling elite did what it could to constrain electoral participation and to limit political competition in order to avoid income redistribution thought the fiscal state. If so, the de facto power of the elite, which is unobserved, would be negatively correlated with political competition, electoral participation and with the size of government. The implication of this would be that our estimate of the effect of political competition is biased towards zero while our estimate of the effect electoral participation is biased upwards away from zero. We have adopted a number of empirical strategies to minimize the likelihood of such biases. Firstly, in all our regressions, we control for country and year fixed effects. This rules out that our inference is contaminated by unobserved determinants that are constant over time (country fixed effects) or affect all countries at a given point in time in the same way (year fixed effects). This reduces, but does not eliminate, the risk of omitted variable bias. In particular, omitted variables that vary over time within a country and which are correlated with our two political variables and with the size of government pose a problem. The best defense against this problem is to control for the “right” set of time-varying observable factors (Acemoglu, 2005). Compared to many other panel studies, we control for a relatively large number of both economic and demographic factors. For example, we can interpret the variable Income equality as a proxy for the de facto power of the elite: The more equal a society is, the less power does the elite wield over the middle class. Controlling for this variable, therefore, goes a long way in eliminating the problem of omitted variable bias alluded to above. Secondly, to address the problem of reverse causality, we have run, as discussed in Section 3.3.3, a set of regressions with our political variables lagged 3, 5 and 7 years obtaining similar results to those reported in Table 2. All in all, we find it unlikely that our results are spurious and caused by omitted variables or reverse causality.