31 Pages Posted: 25 Aug 2014
Date Written: August 21, 2014
The effort to understand when governments provide public goods to their citizens is among the most important in political science. One institution that seems to be highly influential in policy-making, particularly in parliamentary democracies, is the party system. In this paper, we consider two of the key elements of party systems – the effective number of parties and electoral volatility. We argue that the influence of both of these characteristics on the provision of public goods is curvilinear rather than linear, as has generally been supposed in past research. Our contention is that intermediate levels of party system size and stability are ideal for public goods provision; when these levels are too low, the system is not competitive enough to incentivize service provision, but when they are too high, the system is too fragmented and unstable to produce long-run beneficial outcomes. The best outcomes will be observed, we argue, when the benefits of competition are balanced against the risks of fragmentation and instability. We test our argument with a panel model of public goods provision in India’s twenty-nine state and territories, measured by education spending, road construction, and revenue accumulation. Our results provide support for our arguments and shed new light on the role of party systems in structuring good governance in India and in parliamentary democracies around the world.
Suggested Citation: Suggested Citation
Banerjee, Sayan and Hankla, Charles R., Party Systems and Public Goods: The Dynamics of Good Governance in the Indian States (August 21, 2014). American Political Science Association 2014 Paper. Available at SSRN: https://ssrn.com/abstract=2484794 or http://dx.doi.org/10.2139/ssrn.2484794