A Wait‐And‐See Approach to Investments: Do Elections Play a Role?

19 Pages Posted: 5 Jun 2020

See all articles by Daniel Akwasi Kanyam

Daniel Akwasi Kanyam

University of the Cumberlands (formerly Cumberland College)

Date Written: February 2020

Abstract

Unlike previous studies on electoral investment cycle—the tendency for firms to reduce investment expenditure during an election year relative to nonelection years—that have primarily focused on developed countries, this study documents cycles in private investments in relation to the timing of national elections across a broader set of African countries. The estimation results indicate that during election years, private investment decreases by an average of 16% relative to nonelection years. The results also reveal that private investment falls in the year leading up to an election and increases in the immediate year after an election, consistent with the view that electoral uncertainty deters investments. These findings suggest that electoral investment cycles apply strongly to African countries.

Keywords: Africa, elections, electoral investment cycles, private investments

Suggested Citation

Kanyam, Daniel Akwasi, A Wait‐And‐See Approach to Investments: Do Elections Play a Role? (February 2020). Review of Development Economics, Vol. 24, Issue 1, pp. 106-124, 2020, Available at SSRN: https://ssrn.com/abstract=3618510 or http://dx.doi.org/10.1111/rode.12632

Daniel Akwasi Kanyam (Contact Author)

University of the Cumberlands (formerly Cumberland College) ( email )

KY
United States

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