Center for the Study of Democracy

Using a new dataset of Italian publicly traded companies between 1994 and 2008, this paper aims to quantify the value of different types of political connections. Conducting an event study on stock returns, we examine how the stocks of connected companies perform before and after the politicians to whom they are connected are either elected to Parliament, or appointed as government ministers. First, we check whether political connections in general lead to abnormally positive returns. Then, we ask whether political connections have a different effect on stock returns, depending on whether companies have politicians themselves (direct connection) or some of their relatives (indirect connection) among their administrators. Finally, we test the hypothesis that connections are effective only when the politicians are members of the governing coalition. Contrary to most studies, political connections are not always associated with positive stock returns. Taking stock performance as a proxy for the benefits of connections, we conclude that only certain political connections are in fact valuable to companies. Being connected with the (future) governing coalition has the predicted positive effect, whereas gaining or maintaining a connection with the opposition coalition has no effect, or even a negative effect. Also, only indirect connections are found to increase the company’s value, while direct connections are not. However, given the size and composition of our sample, we cannot confidently conclude that indirect connections do differ from direct ones.

Spain reformed the law regulating campaign expenditure in the first half of the nineties. Political parties represented in Parliament claimed that the aims of the reforms were equity and the control of public expenditure in a time of recession. However, the new regulations helped the parties to attain more ‘self-serving’ objectives (i.e., to solve their financial problems by shifting campaign costs to public budgets and improve their credibility, damaged badly by the fund raising scandals reported by the media). A principal outcome of the new campaign regulation was to establish an effective cap to electoral expenditure. This would have not been feasible in the seventies or eighties. Subsequently, the parties confronted a situation of parametric choice, trapped in a prisoner’s dilemma in which each party had to spend more in order to prevent the others from obtaining electoral advantage. But in the nineties, the two largest parties, ridden with problems of soaring electoral debts and disgruntled voters, used the political finance reforms of as a coordination device to attain a Pareto efficient position.

This paper examines how different the two Korean national union federations create and consolidate union democracy according to their organizational characteristics and how the difference in union democracy between these two federations affects movement activities of their local unions. The Federation of Korean Trade Unions (FKTU), which has cooperated with the authoritarian state power and hegemony of capital, rarely challenges the fundamentals of the capitalist system and seldom encourages the full democratic participation of its members. In contrast, the Korean Confederation of Trade Unions (KCTU), a group of independent unions which is familiar with a wide range of political radicalism, always challenges the hegemony of global capitalism. Compared to FKTU-affiliated unions, KCTU-affiliated unions, which have been historically more involved in 'insurgent political practices,' have developed internal democracy, especially participatory democracy. In addition, the KCTU and its constituents have tried to resist 'the hegemony of capital in the sphere of politics' through participating in the political party system while continuously challenging 'the hegemony of capital in the sphere of production' through their union actions. To examine differences in union democracy between the two federations and their constituents I compare various union activities, including the decision-making process, elections and education, by focusing on 1) how historical experiences affect union leaders’ political consciousness about creating union democracy, 2) how both federations and their affiliated unions create union democracy, and 3) what kind of outcomes are produced from the process of building union democracy.

I analyze the effect of inequality on growth over different time-frames. In a large cross-country dataset for the period 1950-2007 I find evidence of a short-run (5-year periods) and medium-run (10-year periods) inverse-U relationship between inequality and growth. In the long-run (20-year periods), however, inequality has a negative effect on growth in poor countries, and a positive effect in rich ones. Finally, in the 37-year period (1970-2007) higher inequality is associated with a lower rate of growth. Thus, while some (but not much) inequality is good for growth, the negative effect of inequality on growth becomes dominant over longer time-frames.

This paper considers the origins and conceptualizations of social capital, particularly the effects of interpersonal trust and participation in voluntarily associations on support for democracy. In so doing, the study introduces a “two-step process” proposition, suggesting that while a causal relationship exists between social capital and democratic support, this link is mediated by intervening variables in the form of knowledge and skills resulting from trust and participation. Empirical tests are conducted on survey data from seven countries covered by the East Asian Barometer to examine the validity of this hypothesis.

Mixed compensatory systems (some call them “mixed-member proportional systems”), are praised for combining "the best of both worlds.” Yet, we know fairly little about their outcomes in practice. We still lack a genuine model that explains how many compensation seats are needed for the outcome to be proportional. Without this knowledge we will neither be able to estimate how many parties we expect to compete and to win representation in parliament under mixed compensatory systems; a key question of comparative research on electoral systems and party systems. This paper provides a quantitative model that shows under which conditions a mixed compensatory system might lead to proportional vote-seat conversion.

Despite its conceptual centrality to research in comparative politics and the fact that a single measure—the Laakso-Taagepera index (LT)—is nearly universally employed in empirical research, the question of what is the best way to “count” parties is still an open one. Among other alleged shortcomings, LT has been criticized for over-weighting small parties, especially in the case of a one-party majority. Using seat-shares data from over 300 elections, I have calculated LT as well as an alternative measure (BZ) which employs normalized Banzhaf scores rather than simple party seat shares, as weights. The Banzhaf index is a voting power index which calculates a party’s voting power as a function of its coalitional potential. Though the two measures are highly correlated, I identify three particular party constellations in which the differences between LT and BZ are systematic and statistically significant. In all of these cases, and especially in the case of a one-party majority, I argue that BZ is a more accurate representation of the actual party system, after any given election, while LT is perhaps better interpreted as a measure of the shape of the party system more generally. These findings have many implications, including with respect to the categorization of party systems and the empirical validity of Duverger’s Law.

I develop the theory of power laws and allude to their prevalence elsewhere in the scientific world. I use actual data on US special interest groups to identify a broad, empirical regularity in the distribution of their lobbying expenditures, which naturally gives rise to a spatial model of the lobbying process. I discuss the policy implications of these findings and stress the superiority of this approach in describing aggregate special interest behavior relative to the stylized, strategic workhorse models in this field. Supplemental mathematical background is provided in two appendices.

This article seeks to contribute to the literature on democratization by examining the media’s causal relationship to political liberalization. First, I briefly review the major theoretical research regarding democratization and the media. I then provide an account of why media freedom contributes to democratic development. Specifically, I highlight two causal mechanisms, The Civil Society Function and The Opposition Function. The Civil Society Function, most often carried out in the print media, describes the media’s role in facilitating a public sphere in which elites can communicate. In contrast, in accordance with The Opposition Function, the media furthers political liberalization by increasing the public’s awareness of alternative political candidates. Because of its vast distribution, the broadcast media best performs The Opposition Function. The case of Mexico is examined to provide a concrete illustration of each of these functions of the media in relation to democratization. In the third section, I show the explanatory ability of the media on democratization, tested empirically against competing conventional explanations of democratization. To do so, I use the ordinary least squares method on time-series cross-sectional data of 200 countries measured annually from 1980-2004. The data and methods are described, as are the empirical findings and their theoretical implications.

In this essay I offer a sharply revisionist account of Taiwan’s transition to democracy, based upon an empirically derived neo-Weberian class-analytic framework. My analysis reveals that the conventional accent on the middle class was largely misplaced. Instead, the true heroes in the struggle for democracy, even in prosperous, placid Taiwan, were the island’s urban and rural working classes, although proper recognition of this fact requires us to look beyond the politics of the workplace. While the better-educated middle classes in fact displayed the highest normative affinity for democratic values, as the primary beneficiaries of the State they were also among the most politically conservative sectors in society. In contrast, working class support for the opposition was driven primarily by a generalized sense of disaffection with the existing social order, although its lack of a coherent agenda also proved consequential for the opposition’s mobilizational strategy and policy orientation after the initial political opening.