Term Limits and Political Dynasties in the Philippines
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Political Elites and Development by MASSACHULEt:TTS iR,,Qj'T-1rE Pablo Querubin B.A., Universidad de los Andes (2001) OCT 0 8 20 M.A., Universidad de los Andes (2002) L RIFS Submitted to the Department of Economics in partial fulfillment of the requirements for the degree of ARCHIVES Doctor of Philosophy in Economics at the MASSACHUSETTS INSTITUTE OF TECHNOLOGY September 2010 © Pablo Querubfn. All Rights Reserved The author hereby grants to Massachusetts Institute of Technology permission to reproduce and to distribute copies of this thesis document in whole or in part. t--\ -A . - Signature of Author...... I ......I ............... Department of Economics August 13, 2010 C ertified by ........ ... .................... V Daron Acemoglu Charles P. Kindleberger Professor of Applied Economics Thesis Supervisor Certified by .......... ............. .......................... Esther Duflo Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics Thesis Supervisor Certified by .... James M. Snyder Jr. Arthur and Ruth Sloan Professor Thesis Supervisor ~-7 bv Accepted . ./. ......I.. ...........I. ... .. ................ Esther Duflo Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics. Chairman, Departmental Committee on Graduate Studies Political Elites and Development by Pablo Querubfn Submitted to the Department of Economics on August 12, 2010, in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Economics Abstract This dissertation consists of three essays on the behavior of political elites and their effect on economic development. The first two chapters focus on political dynasties in the Philippines while the third chapter analyzes the long-run economic effects of the concentration of political power in the state of Cundinamarca, Colombia. In Chapter 1, I use a regression discontinuity design based on close elections to estimate the causal effect of entering the political system on dynastic persistence. I find that candidates who barely win their first election are four times (22 percentage points) more likely to have a future relative in office than those who barely lose and never serve. The magnitude of the effect is remarkable and substantially larger than the effect on the intensive margin reported by Dal Bo, Dal Bo and Snyder (2009) for the United States. These results suggest that the prevalence of dynastic politicians does not simply reflect the existence of a fixed set of historically powerful families, but rather that the political system itself creates persistence. In Chapter 2, I study whether the introduction of term limits in 1987 by the Philippine Constitution was effective at breaking the dynastic pattern in Philippine politics documented in chapter 1. In particular, I explore the potential countervailing effects created by dynasties in response to the introduction of term limits: (1) replacement of term-limited incumbents by relatives and (2) running for a different office. I find that term limits are not effective in reducing the probability that the same family remains in power both in the short and long-run. Moreover, term limits made incumbents safer in their early terms before term limits bind, by deterring high-quality challengers who prefer to wait for the incumbent to be termed-out and run in an open-seat race. These results suggest that political reforms that do not modify the underlying sources of power of dynasties will be ineffective in changing the political equilibirum. In Chapter 3, which was co-authored with Daron Acemoglu, Maria Angelica Bautista and James Robinson, we explore the relative importance of political and economic inequality in explaining long-run development outcomes in the state of Cundinamarca, Colombia. Using micro data on land ownership we find that municipalities that were more unequal in the 19th century (as measured by the land gini) are more developed today. However, we argue that political rather than economic inequality might be more important in understanding long-run development paths and we document that municipalities with greater political inequality, as measured by political concentration, are less developed today. We also show that during this critical period the politically powerful were able to amass greater wealth, which is consistent with one of the channels through which political inequality might affect economic allocations. Overall our findings shed doubt on the conventional wisdom and suggest that research on long- run comparative development should investigate the implications of political inequality as well as those of economic inequality. Thesis Supervisor: Daron Acemoglu Title: Charles P. Kindleberger Professor of Applied Economics Thesis Supervisor: Esther Duflo Title: Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics Thesis Supervisor: James M. Snyder Jr. Title: Arthur and Ruth Sloan Professor Contents 1 Family and Politics: Dynastic Persistence in the Philippines 1.1 Introduction . ..... .. ... -- . .. .. .. .. .. .. .. .. 8 1.2 Historical and Political Background . .. .. .. .. .. .. .. .. .. .. 12 1.3 Data and Descriptive Statistics . .. .. .. .. .. .. .. .. .. .. .. 15 1.3.1 Data Sources .. ... ... .. .. .. .. .. .. .. .. .. .. .. 1 5 1.3.2 Descriptive Statistics . ......... 1.4 R esults . .... ... ... ... ... ... ... ... 1.4.1 Electoral Advantage of Dynastic Candidates . 1.4.2 Posterior Relatives and Electoral Success . .. 1.4.3 Close Elections: Estimating the Causal Effect c Political Power Dy- nastic Persistence .. ... ... .. .. .. 1.4.4 Dynastic Persistence on the Intensive Margin . 1.5 Conclusions ... ... ... ... ... ... ... ... 2 Political Reform and Elite Persistence: Term Limits and Political Dynasties in the Philippines 2.1 Introduction .. ... .. ... ... .. ... ... .. 2.2 Related Literature .. .... ..... .... .... ... ... .. ... .. 2.3 Institutional Background and Descriptive Evidence . ... ... .... ... .. 2.4 R esults .... ...... ...... ...... ..... .. .. ... ... .. ... 2.4.1 Effect on Incumbents Before Term Limits Bind .... .... .... ... 2.4.2 Effect on Incumbents and their Families After Term Limits Bind ... 62 2.5 Conclusions........... ..................... .. .. .. 72 3 Economic and Political Inequality in Development: The Case of Cundina- marca, Colombia' 87 3.1 Introduction ...... .......... ......... ......... ..... 87 3.2 T he Setting .. .......... ......... .......... ........ 97 3.3 T he D ata .... ............. ............ ........... 103 3.3.1 Cadastral Data and the Land Gini ..................... 103 3.3.2 Political Concentration ...................... ...... 105 3.3.3 Measuring the Overlap of Wealth and Political Power ........... 106 3.3.4 Data on Outcomes.......... ............... ...... 107 3.3.5 Descriptive Statistics and Correlations .................... 109 3.4 The Inequality of Wealth: Cundinamarca and the United States ......... 111 3.5 Inequality and Long-Run Development in Cundinamarca ...... ........ 112 3.5.1 Contemporary Outcomes.......... ................. 112 3.5.2 Medium-term Outcomes from the 1937 Census ......... ...... 116 3.5.3 Corroborating the Mechanism ... ...................... 118 3.6 Political Power and Land Accumulation ...................... 119 3.7 The Dynamics of Wealth and Political Power ...... .............. 122 3.8 C onclusions .............. .............. ........... 124 Joint with Daron Acemoglu, Maria Angelica Bautista and James A. Robinson Acknowledgements I would like to thank my thesis advisers, Daron Acemoglu, Esther Duflo and James M. Snyder Jr. for all their support. Without their patience, feedback and confidence in me I would not have been able to complete this dissertation. They inspired me to think about questions of political economy and development in very different ways and helped me become a much better researcher. I hope I will continue learning from them for many years in the future. James Robinson is responsible for my interest in the political economy of development. I thank him for sharing with me his enthusiasm about research and for being a permanent source of ideas and encouragement. I also thank Abhijit Banerjee and Ben Olken for their feedback at different stages of my dissertation. I greatly benefitted from several conversations with my political economy comrades in Cam- bridge. I especially thank Leopoldo Fergusson with whom I have shared many valuable dis- cussions over the last 13 years. Maria Angelica Bautista was always ready to hear me and was very helpful. My conversations with Juan Fernando Vargas were also very motivating and entertaining. The weekly meetings over the last years with Davide Cantoni, Melissa Dell, Ho- racio Larreguy, Monica Martinez-Bravo, Suresh Naidu, Samuel Pienknagura, Patrick Warren, Eric Weese and Noam Yuchtman were very constructive. Discussions with Gabe Lenz, Marc Meredith and other participants at the Political Economy Breakfast were also very useful. My officemates Nicolas Arregui and Carmen Taveras made this last year much more pleasurable. The first two chapters wouldn't have been possible without the hospitality and generosity of many people in the Philippines during my visit in May and June of 2009. I thank Rep. Juan Romeo Acosta, Arsenio Balisacan, Emmanuel de Dios, Jose Ferraris, Rep. Risa Hontiveros, Nico Ravanilla, Juan Rafael Supangco, Jaime Veneracion and Sen. Juan Miguel Zubiri and the staff at the Institute for Popular Democracy, Innovations for Poverty Action and the Philippine Center for Investigative