Government turnover: Concepts, measures and applications Shale Horowitz, Karla Hoff & Branko Milanovic

Turnover Hypothesis Concepts Measures Cases Rule of law Causality issues Refinements Conclusions

Hypothesis 1 Turnover: basic source of variation in institutions and policies. Market economy: personal, property and contract rights to provide security to long-term investments; stable price level to provide reliable information for the future; competition to maintain allocative efficiency. → Does turnover promote instability through discontinuity or accountability through political competition?

Hypothesis 2 Long-lived governments and long-ruling dictators generally have more incentives and scope to implement and maintain corrupt policies that favour their client networks, since they do not have to worry about voters’ feedback. Political competition resulting in greater turnover has a purely favourable outcome when constrained not to threaten market institutions. Citizens will benefit from political competition just like consumers do from market competition.

Concepts 1 Not all turnovers have equal impact: Leadership vs Ideological and policy Democratic vs Authoritarian Violent vs Peaceful Centralized vs fragmented government → Definition and further refinements depend on the specific research question.

Concepts 2 In order to check cumulative impacts, turnovers are to be counted across the time span for which data is available. If recent turnovers, or the ones occurred within a limited period, are expected to have more impact, it is necessary to define a certain cut-off point.

Measures 1 Features of the institutional setting → Formal but powerless institutions? Two legislative branches? Strong presidencies? Leadership turnover → What change in the composition of the new government? What share of the seats is overlapping? Do “leftover” parties have control over relevant policy domains? Do they have enough seats to bring down the government? Multiple legislative institutions → Count only completed turnovers? Code turnovers as fractional alternations?

Measures 2 Ideological distance → Party platforms, expert opinions & public opinion surveys to locate parties within an ideological space. Choose a threshold distance of change necessary for the turnover to occur. Weight impact of change → Count institutional veto players, weighted by seat shares, to measure institutional fragmentation. Time span → Assign different impact to turnovers over time. Code each time period on its own.

Cases 1 28 post-communist countries, from to More than a bare majority of the coalition must be new - old members must not exceed one- fourth or one-third. Counted only full turnovers – all legislative institutions. Not counted where communist party leadership retains authoritarian power – just rebranding.

Cases: Table 1 IDEOLOGICAL DISTANCE: two-dimensional space – economic policy and national identity - with four discrete intervals for each (party platforms & expert opinions). → 3 out of 16 categories: FL & moderate nationalist CL & moderate nationalist CR & moderate nationalist

Rule of Law 1 Neutral judicial, law enforcement and regulatory institutions, with laws that treat all individuals, firms and other legal actors equally. → RULE OF LAW (equal treatment by the legal system and protection of property rights) + CONTROL OF CORRUPTION (bureaucratic and legislative) (World Bank worldwide governance indicator). HP: frequent government turnovers, within market-based legal and security regimes, reduce long-term corruption contracts. Different impact of turnover: greater in transitional systems, that are reshaping judicial and regulatory institutions, less in long-established ones. → Post-communist countries as a good sample.

Rule of Law: Figures 1, 2 Strong positive correlation between government turnover, leadership and ideological, and rule of law.

Rule of Law: table 2 Sample: 27 countries, over the first and the last time periods (1996 and 2004) for which data are available Control variables: natural logarithm of per capita income in 1990; years at war since the transition from communism, centre-left and centre-right democratic governments. → Ideological turnover is associated with an increase in the rule of law score by of a worldwide standard deviation, as compared to for leadership turnover.

Rule of Law: table 3 Cross-sectional models, with half the sample sizes, in the two years 1996 and → Having a centre-left or centre-right democratic government (which are dummy variables for moderate democratic turnover) is the most significant correlate of rule of law in 1996, by the end-point of 2004 ideological and leadership turnover, that are cumulative measures, along with the logarithm of per capita income, are statistically significant correlates of rule of law.

Causality issues Mediation: structural variables, such as economic development, may affect rule of law directly as well as through government turnover. → Turnover should be examined both for its directs effects as well as for the way it mediates the impact of other factors. Endogeneity: turnover influences policy and governance, and it is at the same time influenced by them. → Reciprocal influences between turnover and rule of law require the use of instrumental variables.

Refinements Different hypotheses require additional refinements of the measures of turnover: Peaceful turnovers improve rule of law more than violent ones. Turnovers to democratic governments better than authoritarian ones. Far-left and extreme nationalist governments not expected to improve rule of law. → Little scope: almost all turnovers in the sample are peaceful and towards moderate and democratic governments. Concepts & measures need to be adapted to sample and research question.

Conclusions Turnover can be either potentially destabilising or purely favourable for the rule of law depending on type, frequency, political conditions and historical context. It can have different impact, and it can help explaining related outcomes. → More refined measures of turnover are necessary in order to test the different hypotheses.