Electoral Rules and Constitutional Structures As Constraints on Corruption

B.J.Pol.S. 35, 573–606 Copyright © 2005 Cambridge University Press doi:10.1017/S0007123405000311 Printed in the United Kingdom Electoral Rules and Constitutional Structures as Constraints on Corruption JANA KUNICOVA´ AND SUSAN ROSE-ACKERMAN* Electoral rules and constitutional structures can influence the level of political corruption. We show that proportional representation (PR) systems are more susceptible to corrupt political rent-seeking than plurality systems. We argue that this result depends on the different loci of rents in PR and plurality systems, and on the monitoring difficulties faced by both voters and opposition parties under PR. We also examine the interaction between electoral rules and presidentialism. We test our main predictions and interaction effects on a cross-section of up to ninety-four democracies. The empirical findings strongly support our hypothesis that PR systems, especially together with presidentialism, are associated with higher levels of corrupt political rent-seeking. Elections serve two functions in representative democracies. First, they select political actors who enact public policies in the light of constituents’ preferences. Secondly, they permit citizens to hold their representatives accountable and to punish them if they enrich themselves in corrupt or self-serving ways. In other words, elections provide both incentives for politicians to enact certain kinds of policies and constraints on politicians’ malfeasance. In this article, we focus on the second of these two functions and investigate how different electoral systems constrain corrupt rent-seeking, holding constant other political, economic and social factors. We study three stylized categories of electoral rules: plurality/majoritarian systems with single-member districts (PLURALITY), and two kinds of proportional representation (PR) systems: closed-list and open-list. Under a closed-list (CLPR) system, party leaders rank candidates and voters only cast votes for parties. Under an open-list system (OLPR), voters both select a party and rank candidates given the party’s selection of candidates. In contrast to PR systems, voters under plurality rule both cast their ballots for specific candidates and elect a single representative from their district of residence. We assume that politicians trade off their re-election chances against illicit personal enrichment because revelations of corrupt rent-seeking reduce re-election chances. Thus, the control of corrupt political rent-seeking depends both on the locus of rents and on whether any actors have both the incentives and the ability to monitor those politicians with access to rents. We argue that plurality and PR systems differ in two ways. First, the locus of corrupt rents differs. Under PR, the party leadership can more effectively concentrate * Division of Humanities and Social Sciences, California Institute of Technology, Pasadena; and Law School and Department of Political Science, Yale University, respectively. The authors thank Jose´ Antonio Cheibub, Rafael DiTella, Aaron Edlin, Eduardo Engel, Philip Levy, Fiona McGillivray, Peter Ordeshook, Jonathan Rodden, Frances Rosenbluth, Peter Siavelis, Alastair Smith and Georg Vanberg for helpful discussions and comments on earlier drafts and Philip Keefer and Jessica Seddon Wallack for sharing their data. They also acknowledge benefiting from the comments of the Journal’s referees and editor and from those received in seminar presentations at Yale, Berkeley Law School, the Public Choice Society, the Midwest Political Science Association, the Society for Comparative Research, the World Bank, the Ohio State University and the California Institute of Technology. All remaining errors are the authors’. Rose-Ackerman’s contribution was partially supported by the Center for Advanced Study in the Behavioral Sciences. 574 KUNICOVA´ AND ROSE-ACKERMAN corrupt opportunities in its own hands, so individual legislators have relatively fewer rent-seeking opportunities. Under plurality rule, party leadership does not have as much power over the individual legislators as in PR systems, so the locus of rents in plurality is more evenly divided between the party leadership and individual legislators. Secondly, under plurality, the monitoring of rent seekers is likely to be more stringent than the monitoring of rent seekers under PR. Although our primary focus is on the methods by which the legislature is chosen, we also recognize that a complete model should include other institutional features of a political system such as the level of individual freedom, presidentialism/parliamentarism, federalism, bi-cameralism and the strength of parties. We examine the interaction between presidentialism and electoral rules and include other institutional variables, most notably federalism and individual freedom and rights, as controls in our empirical work. Our article stands at the intersection of two broad literatures: one examining electoral rules and their effects, and the other attempting to explain political corruption. Electoral rules have been shown to affect the incentives of political actors to organize and hence the number of political parties,1 as well as the way in which parties and politicians compete for votes, producing personalistic versus party-centred systems.2 Theoretical arguments conclude that, in established democracies with national parties, plurality rule tends to produce two major parties; in contrast, PR produces several competing parties.3 In addition, electoral rules are believed to affect party discipline: where politicians have incentives to cultivate a personal vote, party discipline will be low.4 Our paper builds on these stepping stones. We argue that electoral rules help determine the interaction between voters and 1 Maurice Duverger, Political Parties: Their Organization and Activity in the Modern State (New York: Wiley, 1954); Douglas Rae, Political Consequences of Electoral Laws (New Haven, Conn.: Yale University Press, 1971); William H. Riker, ‘The 2-Party System and Duverger’s Law: An Essay on the History of Political Science’, American Political Science Review, 76 (1982), 753–76; G. Bingham Powell, Contemporary Democracies: Participation, Stability, and Violence (Cambridge, Mass.: Harvard University Press, 1982); Rein Taagepera and Matthew S. Shugart, Seats and Votes: The Effects and Determinants of Electoral Systems (New Haven, Conn.: Yale University Press, 1989); Arend Lijphart, Electoral Systems and Party Systems: A Study of Twenty-Seven Democracies 1945–1990 (Oxford: Oxford University Press, 1994); Arend Lijphart, Patterns of Democracy: Government Forms and Performance in Thirty-Six Countries (New Haven: Yale University Press, 1999). 2 John M. Carey and Matthew S. Shugart, ‘Incentives to Cultivate a Personal Vote: A Rank-Ordering of Electoral Formulas’, Electoral Studies, 14 (1995), 417–39; Matthew S. Shugart, ‘Presidentialism, Parliament- arism, and Provision of Collective Goods in Less-Developed Countries’, Constitutional Political Economy,10 (1999), 53–88; Roger B. Myerson, ‘Incentives to Cultivate Favored Minorities Under Alternative Electoral Systems’, American Political Science Review, 87 (1993), 856–69; Alessandro Gaviria, Ugo Panizza, Jessica Seddon and Ernesto Stein, ‘Political Institutions and Growth Collapses’ (Washington D.C.: Inter-American Development Bank Research Department Working Paper 419, 2000); Lijphart, Patterns of Democracy; Jessica Seddon, Alessandro Gaviria, Ugo Panizza and Ernesto Stein, ‘Political Particularism Around the World’, World Bank Economic Review, 17 (2003), 133–43; Ugo Panizza, ‘Electoral Rules, Political Systems and Institutional Quality’, Economics and Politics, 13 (2001), 311–42. 3 Rein Taagepera and Bernhard Grofman, ‘Rethinking Duverger’s Law: Predicting the Effective Number of Parties in Plurality and PR Systems’, European Journal of Political Research, 13 (1985), 341–52; Peter Ordeshook and Olga Shvetsova, ‘Ethnic Heterogeneity, District Magnitude, and the Number of Parties’, American Journal of Political Science, 38 (1994), 100–23; O. Amorim Neto and Gary W. Cox, ‘Electoral Institutional, Cleavage Structures, and Number of Parties’, American Journal of Political Science, 41 (1997), 149–74. 4 Carey and Shugart, ‘Incentives to Cultivate a Personal Vote’; Barry Ames, ‘Electoral Strategy Under Open-List Proportional Representation’, American Journal of Political Science, 39 (1995), 406–33; Steven R. Reed, ‘Democracy and the Personal Vote: A Cautionary Tale From Japan’, Electoral Studies, 13 (1994), 17–28; Shaun Bowler, David M. Farrell and Richard S. Katz, eds, Party Discipline and Parliamentary Government (Columbus: Ohio State University Press, 1999). Electoral Rules as Constraints on Corruption 575 organized political actors as well as the dynamic among and within political parties. As a result, electoral rules affect the incentives and ability of voters and opposition politicians to organize and to monitor the corruption of incumbents.5 In addition to the large literature on the effects of electoral rules, a new and growing literature addresses the relationship between political institutions and corruption. This article makes several contributions to this developing field. First, it explicitly distinguishes between corrupt political rent-seeking and pork-barrel spending. The former refers to illicit efforts to increase one’s personal wealth; the latter includes government programmes that benefit a narrow group of citizens often in the politician’s home district. This distinction

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