Bangladesh has turned the political business cycle phenomenon upside down.
Political business cycles are cycles in macroeconomic variables – output, unemployment, inflation – induced by the electoral cycle. This type of business cycle results primarily from the manipulation of policy tools by incumbent politicians hoping to stimulate the economy just prior to an election and thereby improve their reelection chances.
Expansionary monetary and fiscal policies have politically palatable consequences in the short run. When pursued to excess, these very policies can also have very unpleasant consequences in the longer term in the form of accelerating inflation, decreasing savings, worsening foreign trade balance, and long-term expansion of government's share of the GDP at the expense of private consumption and investment. So immediately after the election, politicians tend to “bite the bullet” and reverse course by raising taxes, cutting spending, slowing the growth of the money supply, and allowing interest rates to rise. As a result, the regular holding of elections tends to produce a boom-and-bust pattern in the economy because of the on-again-off-again pattern of government stimulus and restraint to induce an artificial boom at every election time.
Bangladesh’s experience also shows the existence of a political business cycle in GDP growth, albeit with exactly the opposite pattern of boom and bust. GDP growth has consistently declined in each of the last five election years. It happened in 1991, 1996, 2002, 2007 (an election year without election) and 2009 (Figure 1). From the perspective of Western political business cycle theory these growth tendencies appear suicidal for the incumbent. Instead of expanding the economy faster to gain votes, the incumbents appear to be shooting themselves in the foot by allowing the pace of expansion to slow in the election year!
Is this another case of the Bangladesh paradox?
Bangladesh has turned the political business cycle phenomenon upside down.
"Losing power is felt physically, emotionally, in waves of sensation, in moments of acute distress. I know now that there are the odd moments of relief as the stress ekes away and the hard weight that felt like it was sitting uncomfortably between your shoulder blades slips off. It actually takes you some time to work out what your neck and shoulders are supposed to feel like.
I know too that you can feel you are fine but then suddenly someone’s words of comfort, or finding a memento at the back of the cupboard as you pack up, or even cracking jokes about old times, can bring forth a pain that hits you like a fist, pain so strong you feel it in your guts, your nerve endings.”
Julia Gillard, former Prime Minister of Australia who served from 2010-2013
As quoted in The Guardian, September 13, 2013, Julia Gillard: Losing power 'hits you like a fist' - exclusive
I normally try and keep Oxfam trumpet-blowing to a minimum on this blog, but am happy to make an exception for this piece from Jacky Repila (right) on a new report on our Raising Her Voice programme in Pakistan, a country that ranks 134th out of 135 countries on the Global Gender Gap Index (only Yemen is worse).
When Veeru Kohli stood as an independent candidate in Hyderabad’s provincial elections on 11th May, she made history.
Kohli is poor. Making the asset declaration required of candidates, Kohli listed just two beds, five mattresses, cooking pots and a bank account with life savings of 2,800 rupees, wages for labourers in Karachi are around 500 rupees a day.
She’s a member of a minority group – Hindus represent less than 6 per cent of the country’s total population. The vision of tolerance and inclusion of Pakistan’s founding father, Mohammad Ali Jinnah, has sadly been eroded as we can see from the 500 Pakistani Hindus who recently fled to India to escape discrimination.
She’s uneducated and does not boast the political connections or patronage of most politicians. In fact she has ruffled feudal feathers, escaping captivity from her former landlord and fighting in the courts for the release of other bonded labourers.
And then of course, she’s a woman. Only 3 per cent of all candidates contesting the general seats for the National Assembly were women.
And yet…. in spite of the inevitable establishment backlash seeking to devalue her credentials, on 11th May six thousand people voted for her. Although not enough to win the seat, the fact of Kohli’s standing is in itself a remarkable act.
It keeps happening, this pell-mell rush to elections. A country is struggling to come out of conflict we insist on elections straightaway. A country has just survived decades of colonial or authoritarian rule, we insist on elections immediately. The elections happen in some often ramshackle, rough and ready manner then we claim that a new democracy has been born. And we pile on all the expectations of ‘democratic governance’.
And who is the ‘we’ above? That strange creature known as the international community, that’s what.
That this business of hurling ‘elections’ at complexity often ends in tears has not deterred the international community, has not led to a reconsideration of the formula. Each time the effort breaks down in a particular country what is the new cry? Fresh elections of course, as soon as possible!
There are enormous problems bedeviling this approach. The main one is that it resolutely ignores the fact that you cannot build a stable constitutional democracy (more about the formal features in a moment) unless certain structural factors are in place. For instance, one of the things that I find upsetting is how people fail to realize that if you simply rush to elections in a country run until that point as a well-developed authoritarian state, especially if these are winners-take-all elections, what the victors inherit is not a democratic state. What they inherit is an authoritarian state. What do you think the victors are going to do? They are going to use the powers, tools and habits of the authoritarian state to serve their own interests and crush their opponents. And they will claim to be able to do so in the name of something called democracy. That is what happened in post-colonial states in places like Africa and eventually led to all manner of civil wars.
Listening to an expert discussion of the role of elected representatives in social accountability interventions at a recent event hosted by the Mwananchi Governance Programme and CIVICUS in Johannesburg on 16th May 2013, I was reminded of this quote by Joe Khamisi, a former Kenyan MP:
“Save, you may not see Parliament again”, one two-term Member liked to tell us. In many cases non-performers with deep pockets are preferred than stingy doers. “As much as possible, avoid your constituents in the first three years and show up only towards the last half of your term, with plenty of money!”
In response, a Member of Parliament (MP) from one of the countries where Mwananchi works said, “You need to put premium on leadership”. In other words, we should not expect leaders to deliver the change we want if society encourages them to pursue perverse incentives to attain and remain in office, and to achieve solutions to collective action problems.
Looking at the backgrounds of MPs in many countries in Africa, you find that some MPs have been activists in civil society, respected civil servants or faith leaders, often suggesting that things would be very different if it was them that were in office. This is a clear case of a common African saying ‘one finger forwards, four fingers backwards,’ reminding us how easy it is to criticise without examining ourselves. This is why it should not be surprising that again and again we find that when the ‘self-imagined’ leaders get into public office they are equally caught up in the quagmire of perverse incentives as their predecessors.
Can the internet help make elections fair and efficient in developing countries?
A presentation “eParticipation: Citizen Consultation ePlatform –Mexico City Case Study” was given by Edgardo Torres-Caballero, the General Manager for Latin America for Scytl who talked about how ePlatform developed by the company helped Mexico City successfully conduct an electronic consultation through which the city residents cast their votes on-line to select public projects.
After an impressive turnout in Monday’s presidential elections, one thing is clear about Kenya: citizens are energized and ready to participate in shaping the future of their country.
Despite concerns of violence, voters in Kenya were undeterred and turned out in historic numbers Monday - over 70% participation - to cast ballots in the country’s first presidential election since 2007.
The remarkable level of participation had election officials calling the turnout “tremendous,” as polling places were kept open hours later than scheduled to accommodate lines that stretched “nearly a mile long.” Voters formed lines at polling places well before 6:00 a.m. when the polls opened, and many waited for up to 10 hours to cast their ballots.
While this election is a significant success, its true impact on the everyday lives of Kenyans will depend of how the new administration governs. Kenyans should be able to participate in the decision-making processes of their new government in as robust of a manner as they did when electing it.
This will be particularly important as Kenya embraces fairly radical decentralization of political and resource management to the county level as mandated by the new constitution. More open and participatory processes will be crucial to maintaining accountability and effectiveness at the county level.
Ibrahim Fanday, Chairman of Kono Youth Commission smiled proudly as he says ‘Kono is known as a trouble hot-spot – but at the end of the day, the elections were peaceful.’ Martha Lewis, a member of the local women’s network, agreed, saying ‘Hot spot? Cold spot!’
When Sierra Leone went to the polls in November last year, it followed months of speculation and fears that the hotly contested elections would be a flash-point for violence. And Kono, the state which saw the worst of the ten year civil war, and remains notorious chiefly for its diamond miles and its instability, was predicted to be at the centre of any trouble.
The elections passed without major disturbances and were pronounced free and fair by the EU observers following them. Ibrahim believes that the youth of Kono played a role in keeping the polling peaceful, by acting as ‘peace ambassadors’ in their communities. His pride is echoed by everyone I speak to - Sierra Leone seems to have passed some kind of test, in both national and international eyes, by holding an election where 87.3% of the population turned out to vote, and the peace held.
These are some of the views and reports relevant to our readers that caught our attention this week.
"Over the past several years two seemingly independent ideas have been gaining traction:
- New technology allows developing nations to leapfrog over traditional growth patterns (M-PESA, long-range wi-fi).
- The increasing move towards “convenience models” may be pointing the US’ tech sector away from innovation (Peter Thiel’s “they promised us flying cars but instead we got 140 characters”).
In a recent working paper for the National Bureau of Economic Research, economist Robert J. Gordon writes that the US’ current wave of innovation is less of a step forward and more of a lateral move, merely finding novel ways to use innovations made 20 years ago, sitting him squarely alongside Thiel. To illustrate, Gordon asks the following hypothetical question between two options, A and B:
With option A you are allowed to keep 2002 electronic technology, including your Windows 98 laptop accessing Amazon, and you can keep running water and indoor toilets; but you can’t use anything invented since 2002. Option B is that you get everything invented in the past decade right up to Facebook, Twitter, and the iPad, but you have to give up running water and indoor toilets. You have to haul the water into your dwelling and carry out the waste. Even at 3am on a rainy night, your only toilet option is a wet and perhaps muddy walk to the outhouse. Which option do you choose?" READ MORE