Cohesive Institutions and the Distribution of Political Rents: Theory and Evidence

Abstract

This paper considers how public resources are distributed across groups and how this depends on the institutional environment. It shows how executive constraints and openness should matter to this and argues that a key role for institutions is to protect politically excluded groups. It develops an approach to judging political institutions based on the idea that cohesive institutions play a role when there is uncertainty about the allocation of political power. Using spatial data on night light, it shows inequality is lower with executive constraints. In addition, politically excluded groups do better within countries when such constraints are in force.

Paper prepared for the roundtable on Institutions, Governance and Corruption organized by IEA and RIDGE in Montevideo, Uruguay on May 26–27, 2016. We are grateful to the conference participants, especially our discussant Steve Knack, for comments.

Appendix: Discussion of Constraints Measure

Summary statistics are in Table 7.5. In this appendix we discuss the difference between executive constraints as measured by the variable xconst in the Polity IV dataset and the strength of checks and balances as measured by checks_lax in Keefer and Stasavage (2003) (Table 7.5).

Table 7.5 Summary statistics

In Table 7.6 we plot the share of country-years which are coded xconst=7 for values of checks_lax from 1 to 7+. Two patterns are clear. First, categories with very low values of checks_lax also contain very few country/years with strong executive constraints. Second, for larger values of check_lax the two measures diverge. There are many country/years which are coded as strong executive constraints but have relatively low values of checks_lax and vice versa. Only at values of checks_lax = 6 there is a large majority of observations which are also coded as strong executive constraints. Typically, the share is closer to 50 percent.

Table 7.6 Strong executive constraints and checks and balances

In Table 7.7 we show which countries drive this divergence. The most striking feature is that many developed democracies are coded as facing executive constraints but not a high number of checks and balances. Examples are: Sweden, Spain, the UK, Italy, Japan, New Zealand and Norway. Instead, the checks data codes many Latin American countries like Argentina, Brazil, Colombia or Venezuela as having strong checks and balances.

Table 7.7 Comparing veto player and executive constraints

The core of this divergence lies in the way the two variables are coded. The executive constraints variable xconst is available on a seven-point scale. As noted in the text above, the Polity IV manual explains the variable’s construction as follows:

Operationally, this variable refers to the extent of institutionalized constraints on the decision making powers of chief executives, whether individuals or collectivities. Such limitations may be imposed by any “accountability groups.” In Western democracies these are usually legislatures. Other kinds of accountability groups are the ruling party in a one-party state; councils of nobles or powerful advisors in monarchies; the military in coup-prone polities; and in many states a strong, independent judiciary. The concern is therefore with the checks and balances between the various parts of the decision-making process.

The rules code xconst = 1, for example, when there is unlimited authority in which there are no regular limitations on the executive’s actions (as opposed to irregular limitations such as the threat or actuality of coups and assassinations) and category xconst = 7 means that accountability groups have effective authority equal to or greater than the executive in most areas of activity (Table 7.8).

Table 7.8 Executive constraints and individual rights

This is fairly abstract and not easy to interpret. It is therefore important to check the arguments made for coding in some examples. South Africa, for example, is coded as executive parity or subordination (7) for much of its history. The reasoning given in the coding report is:

The type of presidential system found in South Africa places significant constraints on the political autonomy of the chief executive. While the president is not directly accountable to the legislature (as is in the case in a traditional parliamentary system), nevertheless, s/he is chosen by the National Assembly. Moreover, under the terms of the 1997 constitution, political power is shared between the president and the Parliament.

While the institutional design of the South African government provides for significant horizontal accountability, the dominance of the ANC in the post-apartheid era has provided the executive branch with significant power to chart the course of the country with little interference from the legislature. In 2003 the ANC, through opposition party defections, achieved a two-thirds majority in parliament. The political dominance of the ANC was reaffirmed with their landslide. The judiciary is largely independent from executive influence. (Centre for Systemic Peace, Polity IV Country Reports 2010)

The United Kingdom is also coded as featuring executive parity or subordination (7). The reasoning given in the report is:

The parliamentary structure of government found in the United Kingdom places significant constraints on the autonomous actions of the chief executive. The prime minister is elected by, and is directly accountable to, the legislature. Although Britain does not have a written constitution, historical conventions and norms, as well as legal precedents, serve as the foundations of horizontal accountability in this country. The judiciary, while weaker than in many OECD countries, is autonomous from executive interference. (Centre for Systemic Peace, Polity IV Country Reports 2010)

The variable checks_lax from Keefer and Stasavage (2003) is coded as follows:

Checks_lax equals one if LIEC OR EIEC is less than 5 – countries where legislatures are not competitively elected are considered countries where only the executive wields a check.

In countries where LIEC and EIEC are greater than or equal to 5:

• Checks_lax is incremented by one if there is a chief executive (it is blank or NA if not).

• Checks_lax is incremented by one if the chief executive is competitively elected (EIEC greater than six).

• Checks_lax is incremented by one if the opposition controls the legislature.

In presidential systems, Checks_lax is incremented by one:

• for each chamber of the legislature UNLESS the president’s party has a majority in the lower house

• AND a closed list system is in effect (implying stronger presidential control of his/her party, and therefore of the legislature).

• for each party coded as allied with the president’s party and which has an ideological (left-right-center) orientation closer to that of the main opposition party than to that of the president’s party.

In parliamentary systems, Checks_lax is incremented by one

• for every party in the government coalition as long as the parties are needed to maintain a majority

• parties in the government coalition, regardless of whether they were needed for a legislative majority).

• for every party in the government coalition that has a position on economic issues (right-left-center) closer to the largest opposition party than to the party of the executive.

From these coding rules it is clear that the composition of parliament receives more weight than the constitutional rules which govern the interplay between legislature and executive. Also, the independence of the judiciary is only mentioned in the description of xconst as a factor which certainly explains a part of the divergence. If judicial control is important this is an important difference between the two measures.