Political Power-Sharing, Firm Entry, and Economic Growth: Evidence from Multiple Elected Representatives

90 Pages Posted: 23 Nov 2021 Last revised: 1 Aug 2022

See all articles by Harsha Dutta

Harsha Dutta

Hong Kong University of Science and Technology

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore

Arkodipta Sarkar

National University of Singapore

Nishant Vats

University of Chicago Booth School of Business

Date Written: November 21, 2021

Abstract

We examine the effect of political power-sharing on local economic activity by exploiting quasi-random variation in the number of politicians governing adjacent regions. We utilize haphazard overlap of electoral and administrative boundaries in India. This allows us to exploit geographic discontinuity across boundaries separating single and multiple-politician-governed regions and within-region variation in the number of politicians. We find increasing the number of politicians governing an area leads to new firm creation, lower unemployment, and greater real economic activity. The effect is driven by greater state efficiency, lower regulatory bottlenecks, and reduced cronyism following increased checks and balances among non-aligned politicians.

Keywords: power-sharing, checks and balances, multiple politicians, firm entry, regulatory cost, cronyism, state efficiency

JEL Classification: O43, P16, D73, M13

Suggested Citation

Dutta, Harsha and Ghosh, Pulak and Sarkar, Arkodipta and Vats, Nishant, Political Power-Sharing, Firm Entry, and Economic Growth: Evidence from Multiple Elected Representatives (November 21, 2021). Available at SSRN: https://ssrn.com/abstract=3968562 or http://dx.doi.org/10.2139/ssrn.3968562

Harsha Dutta

Hong Kong University of Science and Technology ( email )

Hong Kong

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Arkodipta Sarkar

National University of Singapore ( email )

Kent Ridge
119077
Singapore

Nishant Vats (Contact Author)

University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
279
Abstract Views
909
Rank
175,827
PlumX Metrics