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Discussion Paper Details

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Title: Businessman Candidates

Author(s): Scott Gehlbach, Konstantin Sonin and Ekaterina Zhuravskaya

Publication Date: December 2006

Keyword(s): businessman candidates, government transparency, immature democracy, media freedom, political connections and strength of political parties

Programme Area(s): Development Economics and Public Economics

Abstract: In immature democracies, businessmen run for public office to gain direct control over policy; in mature democracies they typically rely on other means of influence. We develop a simple model to show that businessmen run for office only when two conditions hold. First, as in many immature democracies, institutions that make reneging on campaign promises costly must be poorly developed. In such environments, office holders have monopoly power that can be used to extract rents, and businessmen run to capture those rents. Second, the returns to businessmen from policy influence must not be too large, as otherwise high rents from holding office draw professional politicians into the race, crowding out businessmen candidates. Analysis of data on Russian gubernatorial elections supports these predictions. Businessman candidates are less likely 1) in regions with high media freedom and government transparency, institutions that raise the cost of reneging on campaign promises, and 2) in regions where returns to policy influence (measured by regional resource abundance) are large, but only where media are unfree and government nontransparent.

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Bibliographic Reference

Gehlbach, S, Sonin, K and Zhuravskaya, E. 2006. 'Businessman Candidates'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5985