Estimating the modulating role of economic development on the effect of elections on government expenditure in Africa

Abstract

The study contributes to the political economy debate in Africa by examining the extent to which economic development mediates the effect of elections on government expenditure. To this end, the study employs macrodata spanning 1985–2015 on 43 African countries for the analysis. Robust evidence from the system GMM estimator shows that: (1) election periods significantly induce government expenditure in Africa, and (2) economic development is significant in reducing the use of fiscal surprise in election periods. Policy recommendations are provided in the end.

Keywords:

• Africa
• Budget Cycle Hypothesis
• Democracy
• Economic Development
• Election
• Election Burden
• Government Expenditure

PUBLIC INTEREST STATEMENT

Despite the growing concern that incumbent governments in the developing world use fiscal surprise during election periods to boost their chances of holding on to power, a conspicuous lacuna in the political and development literature is that empirical work(s) exploring the claim in the case of Africa is(are) hard to find. This basically forms the motivation for this study. First, the study examines the effect of elections on government expenditure in Africa. Second, the study investigates the extent to which economic development mediates the effect of elections on government expenditure in Africa. To this end, the study draws on data from the World Bank’s World Development Indicators on 43 African countries for the analysis. The study provides evidence from the dynamic system GMM estimation to show that: (1) election periods significantly induce government expenditure in Africa, and (2) economic development is significant in reducing the use of fiscal surprise in election periods.

Declaration

The author declares that he has no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Specifically, there will be a downward bias when the omitted variable correlates positively with election timing and negatively with fiscal policy outcomes such as government expenditure (Shi & Svensson, 2002).

2. See the list of countries in Table A3

Additional information

Funding

The author received no direct funding for this research.

Notes on contributors

Serebour Quaicoe

Dr. Serebour Quaicoe is the currently the Director of Electoral Services at the Electoral Commission of Ghana. Dr. Quaicoe holds a Bachelor of Arts degree in Economics from the University of Ghana, and an MPhil. and a Ph.D. in Economics as well, both from the University of Cape Coast, Ghana. Dr. Quaicoe has served in various capacities at the Electoral Commission of Ghana including a regional director for the Ashanti region. His research interest is in the areas of public economics and economic growth and development.