martin steiner midwest2012 globalizationelectoralrules

7/28/2019 Martin Steiner Midwest2012 GlobalizationElectoralRules

http://slidepdf.com/reader/full/martin-steiner-midwest2012-globalizationelectoralrules 1/29

Economic Globalization and the Change of Electoral Rules

Christian W. Martin1 /Nils D. Steiner2

Abstract

This paper investigates the link between economic globalization and the change of electoral rules.It is argued that the likelihood of electoral rule changes increases with levels of integration in the

world economy. At the same time, this change should tilt the electoral system towards moreproportionality.

The paper draws on a micro model of the distributive effects of increased economic integration.Because more proportional systems are more credibly able to commit to compensate the losers

of globalization processes, there will be increased demand to change the electoral system towardsmore proportionality under economic circumstances that increase the costs of maintaining aclosed economy.

We empirically test the implications of our model using a data set on electoral rules changes indeveloped democracies. We draw on an empirical model of electoral rules change to assess ourhypotheses and find a positive association between a) proportionality of the voting system andtrade integration, b) proportionality and social spending, and c) global integration levels and theprobability of electoral rules changes that render voting rules more proportional.

1 University of Kiel, Germany. Contact: [email protected] University of Mainz, Germany. Contact: [email protected]



2

1 Introduction

In 1973 New Zealand was hit by the worst economic crisis the country has experienced since

independence. The country reacted by heavily regulating domestic and foreign economic

relations. By 1984 New Zealand had become the most regulated country in the OECD (OECD

1987: 7). Fast forward 10 years: New Zealand has embarked on an ambitious program of

deregulation and liberalization, rendering the country "one of the most open and market-oriented

of the OECD area" (OECD 1999: 67). Interestingly, this major policy change was accompanied

and followed by a major change in New Zealand’s polity, namely the country’s decision to

abandon its Westminster style electoral system for a system of proportional representation

modeled after the German example.

How are these two decisions related? Is there a systematic (and causal) connection between the

policy decision to liberalize and integrate into the world economy and the decision to change the

institutional provisions that define the rules of the electoral game with consequences for, e.g., a

country’s party system (e.g. Cox 1997; Duverger 1954; Rae 1971; Taagepera/Shugart 1989), the

degree and type of access for special interest groups (e.g. Grossman/Helpman 2002;

Naoi/Krauss 2009), the varying incentives for pork barrel politics that benefit narrow

constituencies (e.g. Stein/Bickers 1994; Stratmann/Baur 2002) and the amount of redistribution

and welfare spending (Iversen/Soskice 2006; Milesi-Ferretti et al. 2002; Persson/Tabellini 2005)?Most political scientist would probably answer in the affirmative when it comes to the question

of whether institutions influence foreign economic policy decision. There exists a vast literature

from both political science and economics that finds a link between a country’s institutional

structure and the probability that a country will integrate into the world economy (e.g. Ehrlich

2007; Mansfield et al. 2000; Milner/Kubota 2005). Yet, the possibility of foreign economic policy

influencing institutions, namely electoral institutions, has received scant attention in the literature.

A notable exception is Ronald Rogowski (1987) who provides compelling theoretical arguments

and some empirical evidence on the causal paths that bring about a “natural affinity between

trade and PR” (Rogowski 1987: 206).

That the possible influence of trade on electoral system has not been taken up since is all the

more surprising because of three developments since Rogowski first published his insightful

piece. First, a number of countries have changed their electoral provisions, rendering them more

proportional in most cases (Martin 2009). At the same time, integration levels around the world

have generally risen, albeit with notable exceptions and a growing variance in the degrees of

foreign economic openness (Martin 2005). Second, a number of theoretical political economy



3

models have been developed that attempt to explain why actors might resist reforms even though

these reforms are welfare enhancing. If, as in Gene Grossman’s and Elhanan Helpman’s famous

adage, the answer to the question “why free trade is so often preached and so rarely practiced” is,

indeed, “Politics” (Grossman/Helpman 1994: 833), then it might also be true that actors face an

incentive to create political conditions conducive to world market integration. More generally,

these political economy models (e.g. Alesina/Drazen 1991; Fernandez/Rodrik 1991) provide us

with the tools necessary to model the micro level incentives and constraints actors face when

deciding over whether or not to change electoral provisions. Third, over the last few years a

political science literature has been developing that investigates the consequences of increased

levels of economic globalization for the operation of politics on the domestic level (e.g.

Hellwig/Samuels 2007; Steiner 2010). For example, in Steiner/Martin (2012) we show how

integration into the world economy renders the policy positions of political parties more alike

which in turn reduces electoral participation.

Against this backdrop, in this paper, we ask how economic globalization influences the incentives

to change electoral rules. We hypothesize, first, that relevant actors face increased pressure and

incentives to change electoral rules under conditions that increase the opportunity costs of

maintaining a closed economy, thus creating political conditions under which economic openness

can be more easily achieved. Second, we maintain that integration into the world economy is

associated with the use of PR. In doing so, we go beyond Rogowksi’s previous contribution in

that we specify a novel and distinct theoretical mechanism linking trade and electoral system

choice. In terms of the empirical test of the resulting hypothesis, we substantially extend the

scope of the underlying sample and specify models that look for effects on changes in electoral

rules rather than cross-sectional associations to better disentangle the causal direction of the

proposed association. Third, to substantiate our claim of a causal relation between trade

integration and electoral rules becoming more proportional we provide empirical evidence for the

connection between social expenditures, trade, and proportional representation.

In the next section, we will review the literature relevant to our arguments. We will then sketch a

theoretical model and derive hypotheses from the comparative static properties of the model

which we will put to an empirical test in a subsequent section. A final section concludes.



4

2 Explaining electoral rule changes – towards theoretically informed explanations

This section briefly reviews previous attempts to explain changes of electoral rules. While

neglected for a long time, following the reforms of the 1990s in New Zealand, Japan and Italy

scholars have turned their attention to the determinants of electoral rule changes. Most of the

earlier literature consists of case studies dealing with individual reforms in an explorative fashion

(e.g. the individual contributions in the special issue of the International Political Science Review

1995). Another strand of literature adds a comparative perspective by analyzing reform cases in

order to draw descriptive conclusions about similarities as well as idiosyncratic factors driving

changes of electoral systems (Renwick 2010; Sakamoto 1999). Finally, there is an increasing

amount of scholarly work that follows a more theory-guided and deductive approach by deriving

hypotheses from formal or informal models in order to test them empirically on a number of

cases (e.g. Colomer 2005; Martin 2009). Building on Rokkan (1970), much of this research is

concerned with the historical choice of electoral systems in the Western democracies at the

beginning of the 20th century (Boix 1999; Calvo 2009). Within this strand of literature, and most

interesting from our perspective, scholars have also pointed to the significance of economic

interests in explaining electoral reforms (Cusack et al. 2007, 2010). The present contribution adds

to this theoretically informed research on electoral system changes and is most closely linked to

Rogowski (1987) which is the only existent contribution that systematically investigates into

international economic factors as a driving force behind structural pressures for electoral reform.

The exploratory work of the first two strands can be very roughly summarized as pointing to a

long list of factors, partly of country-specific nature, which can be of relevance in explaining

individual instances of electoral reform. For example: While some of the work clearly points to

the self-interest of politicians and parties (e.g. Bawn 1993), other contributions emphasize that

electoral reforms are at times brought about despite conflicting interests of politicians and parties

in power (e.g. Renwick 2010). We certainly do not deny the view emerging from the more

explanatory work that a full explanation of individual reforms needs to take the complexity and

heterogeneity of individual cases into account. We agree that much can be learned especially in

terms of theory development by closely tracing processes of electoral reform (and also non-

reform). At the same time, we maintain that despite the idiosyncrasies of individual reform cases,

we can gain general knowledge on structural forces that drive electoral reforms by following a

more deductive and theory-guided approach. This general verdict seems to be clearly confirmed

by a number of recent contributions that successfully follow such an approach.



5

A path breaking article in this regard is Boix (1999). Drawing on earlier work of Stein Rokkan

(1970), Boix is concerned with explaining which Western democracies adopted proportional

representation (PR) at the turn of the 19th century and which ones kept some form of majority

voting (MV). In order to do so, Boix formulates a semi-formal model that focuses on the

incentives of the ruling parties. The key trigger of electoral change in this era was a fundamental

change in the electoral market brought about by the introduction of universal franchise.

According to Boix, the established right parties switched to PR if (a) there was a strong socialist

party and (b) none of the ruling non-socialist parties enjoyed a dominant position. Under these

circumstances PR was a safeguard position against the threat of socialist dominance under MV.

Boix tests this prediction with data on the choice of electoral rules in the interwar period for 22

Western democracies. His results show the predicted negative interaction effect of strength of

socialism and the fragmentation among the ruling parties on the effective electoral threshold as a

measure of the proportionality of the electoral system.

This work has been subsequently criticized by Thomas Cusack, Torben Iversen and David

Soskice (CIS) (2007). CIS (2007, 2010) offers a different explanation for the historical choice of

electoral systems during the earlier phase of the 20 th century 3 which seems to build on their work

on the redistributive consequences of electoral systems (Iversen/Soskice 2006) and the varieties

of capitalism literature (Hall/Soskice 2001). Key to their explanation is the political-economic

structure of a country. Rather than viewing corporatism and liberalism as mere consequences of

the electoral systems, CIS argue that the choice of the electoral system was already endogenous to

whether countries had “protocorporatist” structures or not. “Protocorporatist” countries were

characterized by a general higher degree of economic coordination. In particular, CIS (2007: 385)

refer to the presence of a “guild tradition and strong local economies”, “widespread rural

cooperatives”, “high employer coordination”, centralized industry unions and a “large skill-based

export sector”. While their argument is detailed and complex, it’s general idea can be most easily

understood by recognizing that PR allows the representation of and coordination among

different economic interest groups in the parliamentary arena much easier than MV. Given the

protocorporatist traditions, economic interest groups had a common interest in a “regulatory

system, as well as in a system of social insurance, that would protect investment in co-specific

assets” which called for “legislative institutions that permitted coordination in regulatory policy” .

3 In a later contribution to the debate, Cusack et al. explicitly distinguish between the choice of electoral systems inthe “democratization” period 1900-14 and the choice of electoral systems after World War I emphasizing that their

explanation intents to target the question “why, once the complex power struggles over democratization […] hadbeen resolved by the start of the 1920s, did legislatures or constitutional conventions adopt PR in one set of countries while majoritarian voting was maintained in the other?” (Cusack et al. 2010: 393).



6

Whereas this argumentation sounds functionalistic, CIS (2010) offer a model of the politics

involved in a later contribution. In countries with a high degree of coordination parties and their

leaders were strongly identified with particular economic interests.4 When the nationalization of

politics and democratization increased the electoral competition in the single member districts of

the existing MV systems, the parties faced a trilemma: They could (a) broaden their appeal to

compete for votes outside the interest, (b) merge with other parties or (c) advocate for a switch to

PR. CIS argue that from the viewpoint of party leaders a switch to PR was the least risky and

most attractive option. CIS test their model quantitatively and obtain a strong negative effect of

their “coordination” index on the effective electoral threshold capturing the proportionality of

the electoral system in place in the 1920s in 18 Western democracies. The authors also emphasize

that in countries that adopted PR party preferences were uniform in advocating PR; a fact which

in their view is not consistent with predictions from Boix (1999).

While CIS in the end – as Boix (1999) – ultimately concerned with a “historically and

geographically bounded debate” (Cusack et al. 2010), their model implicitly argues convincingly

for a potential role of political economic factors in explaining electoral reform more generally.

Given that we know that electoral systems are consequential for a number of political-economic

outcomes, this seems not a farfetched idea. In a similar vein, CIS arguments build on some well-

respected other contributions that emphasize the corporatist traditions especially in the smaller

European states and their linkages to political institutions in the more narrow sense (Katzenstein

1985, Lijphart 1999). In Lijphart’s seminal analysis on patterns of democratic government the

distinction between corporatism and pluralism is highly correlated with the proportionality of the

electoral system, the number of parties and the number of parties represented in governments

together constituting the specific type of “consensus democracy” (on the “executive-party”

dimension). This pattern is very much in line with the ideas of CIS.

More closely relevant to our present work, in that it explicitly considers the role of economic

openness, is the classical work by Katzenstein (1985) on how corporatism emerged in the small

European states. For Katzenstein the democratic corporatism of the small European states was a

successful response to their economic vulnerability stemming from their economic openness and

dependence on international trade. In line with CIS, Peter Katzenstein (1985) links the corporate

4 “Industry associations were typically linked to liberal parties, and centralized industrial unions to social democraticparties; peasant organizations and cooperative movements were variously located in agrarian parties or conservativeparties; conservative parties often also incorporated the artisan sector; and so on. A variant of the interest party

linkage, equally in the PR adopters, was provided by Christian Democratic parties, which were organizationally basedon Catholic organizations covering different economic groups (with peasant and handwork associations of moreimportance and Catholic unions of less, and business relatively unimportant)” (Cusack et al. 2010: 397).



7

arrangements of the small European economies explicitly to their adoption of PR. For

Katzenstein (1985: 157), PR was an “enabling condition” for corporatism, but also itself an

“outcome of a historical evolution that distinguishes the small European states from the large

industrial countries”. In this context, Katzenstein (1985: 157) seems indeed to causally relate not

only the corporatist arrangements, but at the same time the adoption of PR to the economic

openness of the small European states (for similar interpretations, see also Lijphart 1999: 260 and

Ehrlich 2007: 573; for a different interpretation of Katzenstein, see Rogowski 1987: 206). 5 From

Katzenstein’s perspective the adoption of PR thus reflected economic incentives for cooperation

which ultimately resulted from the trade-dependence of the small European states – though the

explicit mechanisms leading to PR remain arguably a bit underspecified.6

Building on the work of Katzenstein, the most explicit consideration of a causal association

between international trade and PR is Rogowski (1987). Rogowski’s theoretical considerations

start from a functionalistic perspective: He asks “what kind of state would be optimal in an

advanced and trade-dependent economy – that is, most likely to increase national income and

wealth” (Rogowski 1987: 208). Rogowski gives three answers to this question: Firstly, the country

should be able to resist domestic political pressures for protectionist measures; secondly and

relatedly, the political system should be resistant to rent-seeking behavior; and thirdly, the

political system should guarantee stability. In Rogowski’s view all three goals are best realized

under PR (and the resulting strong and disciplined national parties). By simply reversing the

argument, Rogowski infers that trade-dependent countries are pushed towards the adoption of

PR. The predicted association between trade (measured as usual by the sum over exports and

imports as a share GDP) and PR is then tested on cross-sectional data from 24 OECD members

and clearly confirmed for two different measures of the electoral systems, a dummy for PR and

the number of electoral districts.

In our view, the main problem with Rogowski (1987) is that the direction of causality between

trade and PR remains somewhat unclear on both theoretical and empirical grounds. On the

theoretical level, one could point to exactly the arguments mentioned by Rogowski in order to

5 “Why was electoral compromise possible? […] the strong incentives that economic openness provided for exportspecialization reinforced economic and social links between sectors that in larger countries were more sharply opposed. It was the coincidence of these political opportunities and social convergences, reinforced constantly by economic openness and the perception of vulnerability, that inhibited the emergence of a winner-take-all mentality and thus made possibly the corporatist bargain” (Katzenstein 1985: 157).6 Note that also for CIS (2007: 379) export specialization is one of the central features of the protocorporatistpackage that characterized the states that adopted PR: “Industrialization based on export specialization […]. Export

among industrialized regions put a premium on the capacity of firms to differentiate their products and tended torely on specialized skills.” CIS stop short of explicitly linking electoral reform to trade openness, but this link istherefore implicit in the analyzed association between protocorporatism and the adoption of PR.



8

infer that it is the electoral system which influences openness to trade and actual trade levels,

rather than the other way around. On this account, PR countries would trade more exactly

because they are better able to resist pressures for protection and private rent-seeking and are

advantageous in guaranteeing political stability. Indeed, Grossman and Helpman (2005) do turn

the argument on its head by formally showing that MV systems tend to have more protectionist

systems; i.e. they argue that institutions affect openness to trade (which should, in turn, affect

actual trade levels), rather than trade affecting the choice of institutions. Ehrlich (2007) even

builds on the specific channels proposed by Rogowski in that he argues (and empirically

demonstrates) that tariff rates are higher with more electoral districts and low levels of party

discipline.7 Similarly, Evans (2009) demonstrates that MV systems tend to have higher average

tariffs. On the empirical side, then, it is unclear how to theoretically interpret a cross-sectional

association between PR and trade openness (either measured as regulative openness or actual

trade levels).

We draw two main conclusions from this discussion: The theoretical conclusion is that we need a

model that goes beyond arguing for a natural affinity between trade and PR which can be

interpreted in both causal directions. Ideally, a theoretical model should elaborate closer on the

incentives for electoral reform to achieve this. In terms of empirical testing, one should also

specify models that look for effects on changes in electoral rules rather than just cross-sectional

associations to better disentangle the causal direction of the proposed association. The empirical

part of the paper will present such an analysis.

Beyond the historically oriented work, there is little prior theory-guided quantitative work on

electoral rule changes for the era after World War II. The only two contributions we know of are

Colomer (2005) and Martin (2009). These two contributions already establish that electoral rule

changes can be studied fruitfully with quantitative tools also for the modern era. Colomer turns

Duverger’s law on its head by showing that whether PR or MV is chosen in the first place

depends on the pre-reform number of parties. Colomer thus points to a potential endogeneity

problem for analyses that try to establish an effect of the electoral system on the number of

parties. Martin (2009) shows that electoral rule changes are less likely with more political veto

players and more likely with increasing ideological fractionalization within the government.

Further, electoral rule changes are generally more likely under MV. We build upon this pioneering

work in our empirical efforts by bringing the idea that economic factors, and especially the

7 Ehrlich (2007: 573) points to the endogeneity problem involved and concludes: “Future work, though shouldfurther investigate how trade policy may influence institutional design.”



9

international economy, might play a role in electoral reforms to the quantitative study of electoral

rule changes in the modern era .

3 The model

The causal chain leading from globalization to the change of electoral rules is a long one. In order

to elucidate the conditions under which such a connection can plausibly be argued for, we draw

on a micro model that centers on the problem of credible commitment. Credible commitment

problems have their roots in problems of time inconsistency, i.e. the dilemma stemming from the

fact that a policy announcement or implementation of a policy will change the optimal strategy of

actors (Kydland/Prescott 1977). Assume, for example, that we announce to our students at the

beginning of the term that there will be finals, and that our announcement is based solely on our

goal that students study hard. In this situation, we would not have an incentive to actually have

students write finals because our announcement will have achieved what we intended in the first

place – making students studying hard because they expected that there will be finals. However,

assuming rational students, students would anticipate this change in incentives and not study hard

because there will be no finals. Hence, we cannot credibly commit to administering finals which

is the reason why the decision of whether or not there will be finals is usually not left to the

discretion of instructors but institutionalized at a higher level of the university.

This textbook example highlights the political difficulties of trade liberalization. Although a more

liberal trade regime will enhance overall welfare, there will be individuals who will be worse off

under the new policy. Even though they could be compensated by the winners of trade

liberalization – a move that would still leave everybody at least as well off as before – the promise

to compensate is not credible. Once the new, more liberal trade regime is in place, the winners no

longer have an incentive to uphold their promise. Because the losers anticipate the winners’

reneging they will try to block liberalization policies, for example by lobbying parties (e.g.

Magee/Brock/Young 1989) or governments (e.g. Grossman/Helpman (1994). If we assume

direct democracy, barriers to free trade can be sustained because of individual uncertainty over

whether one will be a winner or loser of liberalization (Fernandez/Rodrik (1991). In this

situation, a liberalization proposal can be struck down ex ante even though it would garner a

majority ex post.

We will use the Fernandez/Rodrik (F/R) model to inform our subsequent argument. At its core,

F/R is about uncertainty of one’s individual future position in the economy:



10

“When individuals do not know how they will fare under a reform, aggregatesupport for reform can be lower than what it would have been under completeinformation, even when individuals are risk-neutral and there is no aggregateuncertainty.” (F/R 1991: 1147)

How can we tie in this prominent role uncertainty plays in the F/R model with the change of

electoral rules? To see this, let’s first consider the differences between the two basic voting

systems, proportional representation and majority voting. MV is generally associated with few

parties, a dominant executive branch of government, and a concentration of power with whoever

happens to command the majority. Conversely, PR is associated with a higher number of parties,

coalition governments and a more balanced relationship between the executive and the legislative

branches of government (see Lijphart 1999).

If an individual had to decide upon supporting trade liberalization under F/R style conditions of uncertainty – under which system should that individual be more likely to support trade reform?

We argue that a PR system is more conducive to generate the necessary support for trade

liberalization, namely for two reasons: Speed of decision making and policy implementation on

the one hand, and credibility of compensation on the other. Under PR, because of the properties

of such a political system outlined above, the speed with which the executive can take and

implement policy decisions is slower than under MV (Schmidt 2002: 150). This is also reflected in

the speed with which policy reversals can be implemented. Therefore, over the process of

deliberation and, possibly, gradual implementation of reform, the problem of individual level

uncertainty should decrease because individuals garner more information about their future role

in the economy. Contrast this to the political leeway an ideal type government enjoys under MV:

Unconstrained by coalition partners, with a strong position vis-à-vis the legislative, it can decide

upon trade liberalization and implement it much more swiftly than its PR counterpart – if it has

the necessary support. If we take the predictions of the F/R model seriously, however, the level

of support should be lower than in the alternative scenario of a more gradual decision making

and implementation process. Hence, the level of individual uncertainty can be expressed as a

function of the time it takes the political process to decide upon and implement trade policy

liberalization. More specifically, our argument suggests a negative relationship between the degree

of individual-specific uncertainty and the duration of the decision making and/or the

implementation process. When there is a lengthy deliberation process and/or the reform is only



11

gradually implemented then information about individual level costs ( c i in the F/R model) will

become more readily available, thus reducing uncertainty.8

Let’s turn to our second channel of influence, credibility of compensation promises. Even though

the F/R model is explicitly constructed as a positive model that does not include compensation

considerations, it follows from this model r that credible compensation schemes are required to

overcome the status quo bias against trade policy liberalization in the presence of uncertainty..

Economic integration tends to increase individual economic insecurity for several reasons. Trade

integration triggers structural economic change, for example creating winners and losers along

sectoral (Ricardo-Viner models) or factoral (Heckscher-Ohlin models) lines. Moreover, more

open economies are also more vulnerable in the aggregate given their increased dependence on

external factors which in turn translates into increased economic risks on the individual level. It is

against this background that several scholars (e.g. Cameron 1978; Rodrik 1998) have emphasized

that a strong state, and especially welfare state, is needed to make integration politically feasible.

In Dani Rodrik’s (1998: 998) words: “Societies seem to demand (and receive) an expanded

government role as the price for accepting larger doses of external risk.” This “compensation

hypothesis” is backed up empirically by the strong and robust correlation between trade

openness and public spending (Cameron 1978; Rodrik 1998). If these scholars are correct in

asserting that international economic integration is only feasible under credible compensation, the

decisive question, then, becomes how compensation can be made more credible ex-ante ?

What makes a compensation scheme credible? One possibility to enhance the credibility of policy

promises is to reduce the discretion of policy makers in their implementation (Kydland/Prescott

1977). To achieve this, two basic mechanisms have been proposed in the literature, namely the

existence of checks and balances on the one hand (e.g. Tsebelis 1995; 2002), and delegation to

some independent decision making body on the other hand (for an overview, cf. e.g.

Keefer/Stasavage 2003).9

Checks and balances, as captured by the notion of “veto players” in a political system make a

policy promise more credible because to reverse an implemented policy requires consensus

8 A functionally equivalent effect could be brought about by the existence of a second chamber or other veto playersnot connected to the voting system. We will test for these possible influences in the empirical section of this paper.9 Delegation to an independent body as a mechanism to overcome time inconsistency problems has primarily beenstudied in the context of central bank independence (see Keefer/Stasavage 2003: 408). Ex ante delegation of monetary policy to an independent central bank adds credibility to policy makers’ commitment to maintain pricestability (Rogoff 1985). Conversely, if policy makers enjoy monetary discretion, they may feel tempted to induce

political business cycles in pre-election years (for an excellent overview and critique of political business cycle modelscf. Drazen 2001).



12

among all of the veto players. Tsebelis’ fundamental insight – that systems with more veto players

have a harder time deciding on policy reforms – works to the advantage of those who have to

rely on the credibility of policy promises. Once a compensation scheme has been decided upon it

is harder for actors to renege on their promise the more veto players are involved. This

theoretical reasoning is in line with empirical studies that suggest that coalition governments tend

to have higher deficits in times of negative economic shocks, exactly because it is less likely that

the coalition parties reach agreement on expenditure cuts (e.g. Roubini/Sachs 1989). This

discussion, then, suggests that PR tends to make compensation more credible, because PR

enhances the expected stability of compensatory expenditure programs already in place or agreed

upon before a liberalization of external economic relations.

Moreover, beyond its effect on the stability of status quo policies, the existence of PR renders

compensation more credible, because PR seems to be generally associated with bigger

government, more transfers and redistribution. The literature offers several theoretical

mechanisms bringing about this association. The most common explanation focuses on PRs

higher affinity towards universalistic transfer programs that derives from distinct logics of

political representation (Milesi-Ferretti et al. 2002; see also Persson/Tabellini 2005). Because MV

systems produce a system of geographical representation, MV favors public good spending that is

geographically targeted. In contrast, PR produces a system where different social groups (that are

not geographically defined) are represented in parliament. In a PR system, representatives have

incentives to advocate transfer programs favoring different groups with the result that overall

transfer spending tends to be higher than in PR system. Whether total government spending is

higher under PR remains theoretically unresolved in the Milesi-Ferretti model: When the median

voter is more interested in private consumption and transfers relative to public goods, overall

spending is predicted to be higher under PR (and vice versa).

The model in Iversen and Soskice (2006) instead focuses on social classes, preferences over

redistribution and the different across-class coalitions that are likely to emerge under the two

types of electoral systems. The basic idea of their formal model is that middle class voters tend to

vote for center-right parties and not for center-left parties in MV systems. They do so because

they fear redistribution towards the poor. In a PR system, in contrast, middle class voters vote for

a center party which then aligns with the poor to exploit the rich. The driving factor behind this

opposite conclusions is that, in the MV case, it is not possible for the center left to ex-ante

credibly commit to not redistribute from the middle class to the poor once in power. With PR in

contrast, the middle class party can ensure to not lose from redistribution, because it is



13

represented in the governing coalition. The prediction that emerges from the model is that

redistribution will be higher in PR systems.

Whatever the particular mechanism, the available empirical evidence suggests that market risks

are reduced and that the poor fare better under PR. Iversen and Soskice (2006) demonstrate that

actual redistribution is higher under PR among a set of OECD countries. Persson and Tabellini

(2005) report evidence that welfare state spending and government spending in general are higher

under PR. The relationship between PR and government, and more specifically welfare, spending

suggests that the adoption of PR is a mechanism to credibly commit to compensate losers of

economic integration not only because PR enhances the longevity of compensation programs

already in place (as explained above), but also because PR enhances redistribution and welfare

spending, and thereby compensation, in general. In short, PR makes compensation more likely

and, therefore, more credible.

What reason, then, do we have to hypothesize that globalization and the change of electoral rules

towards more proportionality are related? The first reason stems from the observation of two

trends temporally coinciding: First, a “rush to free trade” (Rodrik 1994), i.e. a liberalization of

current account policies integrating economies (not only of developing countries) globally.

Second, in the last 20 years, quite a few countries have changed their electoral rules, in some cases

radically. In fact, Patrick Dunleavy and Helen Margetts (1995) have called 1993-94 an “annusmirabilis in which three established liberal democracies – Italy, Japan, and New Zealand –

radically changed their voting systems”. Of course, the mere coincidence of these two trends

does not in any way establish their causal connection. Yet, it seems as a good starting place to

think about the incentives policy makers may face to change electoral rules under conditions of

globalization.

By “globalization”, we refer to a situation in which a generally high level of trade and capital

account openness exists globally. As we have shown elsewhere (Martin/Schneider 2007) levels of

trade regulation in the world are strongly and positively associated with levels of regulation in a

focal country. Put differently, the more open the world, the more open individual countries will

be, even after de-trending and controlling for common exogenous shocks. The theoretical

mechanism underlying this empirical observation is straightforward: Policy makers face higher

opportunity costs of maintaining a closed trade regime under conditions of generally high levels

of trade openness. To the extent that they wish to realize the gains from trade, their incentive to

globally integrate their countries should be higher the higher the level of global integration.



14

Given the time inconsistency and credible commitment problems outlined above, changing

electoral rules towards more proportional voting provisions is a possible way to overcome

resistance to trade reform. Policy-makers and interested actors have, thus, incentives to push

electoral reforms towards more proportionality in order to secure the gains from trade. Further,

these incentives increase with the opportunity costs of maintaining a closed economy rendering

electoral rule changes towards PR more likely if these costs increase. If PR systems are, as we

have argued above, indeed better able to overcome problems of credible commitment, and the

incentive to liberalize trade relations increases with global levels of integration, then more

openness in the world should be associated with a trend to rendering electoral systems more

proportional.

This argument assumes rational, opportunistic politicians, voters/workers whose level of

uncertainty about their post-trade reform role in the economy is systematically lower under more

proportional voting provisions, and a positive association between gains from trade being

realized and the probability of being (re-)elected into office. Note that we allow for uncertainty

on the part of workers/voters, i.e. our argument does not require hyper-rational actors. We

maintain the basic structure of the F/R-model but add to it by considering the political process

and by endogenizing the mechanisms by which individual level uncertainty can be mitigated.

In the next section, we turn to empirically test our theoretical propositions about a positive link between globalization and the proportionalization of electoral rules.

4 Empirical evidence

In order to assess our hypotheses on the connection of globalization, trade liberalization, and the

change of electoral rules, we proceed in three steps. We first seek to re-establish Rogowski’s

(1987) result of a positive association between trade and PR. Additionally, we use not only tradeto GDP ratios as a measure of integration but also two policy variables that capture integration as

restrictions brought about by political decisions.

As a next step, we seek to assess the degree to which the above modeled processes influence the

change of electoral rules. As outlined above, we expect the demand for and supply of electoral

rules changes rendering a country’s voting system more proportional to increase with opportunity

costs of maintaining a closed trade regime. We model this by including a variable that captures

trade openness of other countries, i.e. the degree to which other countries are integrated into the

world economy.



15

We finally turn to the question whether PR systems indeed offer more credible compensation

schemes. We capture this by including social expenditures and government consumption as

dependent variables in our models and by relating these variables to measures of the

proportionality of the voting system and to measures of trade integration.

4.1 Sample, data, and methods

We draw on a variety of different data sets to assemble the data needed for our empirical analysis.

Data on trade to GDP ratios (exports + imports / GDP), the weighted applied tariff rate,

population, Gross National Income (GNI), GNI per capita, and government consumption as a

share of GDP are taken from the World Banks World Development Indicators database (World

Bank 2011). Alongside the weighted applied tariff rate, we use the KOF indicator of global

integration as a policy measure. This data stem from the KOF Index of Globalization (Dreher

2006; Dreher/Gaston/Martens 2008).

Our central dependent variables – use of PR and changes to the voting rules that render them

more proportional – together with the independent variable “checks” that captures institutional

veto players are based on the Database of Political Institutions (DPI) (Beck et al. 2001). The DPI

data contain information on a wide variety of institutional features of all countries for which dataare available. Included are information on a country’s voting rules, in two forms: Two dummy

variables denote whether a country uses PR, MV, or a mixture of both. From this, we

constructed two dummy variables, PR_WIDE and PR_NARROW. PR_WIDE is coded 1 if the

DPI data indicate that the country uses PR, regardless of whether the variable denoting MV is 0

or 1. That way, countries are coded as using PR that also employ features of plurality voting.

PR_NARROW is coded as 1 if the DPI show the country as using only PR, i.e. the “plurality”

variable in the DPI data is 0.

To gauge changes to electoral rules that render a country’s voting provisions more proportional,

we turn to the variables “mdmh” and “mdms” in the DPI data set. These variables capture mean

district magnitudes as they apply to elections to the lower and upper parliamentary chamber,

respectively. From this, we construct a variable “PROPORTIONALIZE” that takes on the value

1 if either of the two district magnitudes was larger in t than it was in t-1. Put differently, an

increase in mean district magnitude is treated as an occurrence that renders the voting system

more proportional. That way we are able to capture changes that are less far reaching than

systemic changes, while maintaining comparability across cases.



16

Lastly, we draw on the OECD Social Expenditure Database (SOCX) (Adema/Fron/Ladaique

2011) to capture a country’s social spending (see below for details).

Our sample is restricted by data availability, and our decision to include only democratic

countries. Accordingly, we considered only countries that scored 8 and higher on the Polity2

combined democracy score. The longest date range we cover in our multivariate analysis is 1976-

2009 (see notes in regression tables).

Given the time-series cross-section nature of our data, we use random effects logit models for

those models that employ a dummy variable as their dependent variable (Models 1-5), and a

Prais-Winsten regression with panel corrected standard errors and AR-1 process in the error term

for models 6-8. The results are robust to alternative estimation techniques; details are available

upon request.

4.2 Results

Figure 1 provides a first glimpse at the connection between integration and the use of PR. On the

vertical axis, we denote yearly averages of economic integration according to the KOF index on

globalization (Dreher et al. 2008). We use a specific sub-component of that indicator, namely the

one that captures policy restrictions against cross border movements of goods, services, and – to

some extent – capital. Note that this indicator takes on higher values if a country is more

integrated into the global economy, i.e. the values become larger with fewer restrictions.

Figure 1 allows for three observations. First, countries that employ PR consistently use less

restrictive policies than countries that do not use PR. Second, PR countries tend to show fewer

fluctuations than non-PR countries. In fact, the overall standard deviation of the KOF

restrictions indicator is 19.62 for the non-PR countries and 19.46 for the PR countries. Third, the

gap between the two groups seems to have narrowed over the last few years, suggesting that the

trend to adopting more proportional voting rules (Martin 2009) may have slowed or have come

to an end. Put differently, those countries that could profit from adopting PR in order to

integrate more closely into the global economy may by now have already done so while the

democracies that have not adopted PR either have lower levels of integration or have found

functional equivalents for PR, namely a high level of checks and balances. Overall, the figure

provides first, tentative supports to our argument that countries that are more integrated into the

economy are more likely to use PR. This observation lends plausibility to our theoretical assertion



17

that PR is more conducive to commitments that allow for a more credible compensation of

possible integration losers.

We next turn to assess this connection in a multivariate setting. Table 1 presents results from a

random effects logit regression. The dependent variable is a dummy variable that is coded 1 if the

variable “pr” in the Database of Political Institutions (DPI) (Beck et al. 2001) takes on the value

1. That way, we use a wide definition of proportional representation (PR_WIDE) that includes

countries using a mixed system with both elements of PR and MV, like New Zealand after the

1993 reform, or Japan.

As independent variables, we use the trade to GDP ratio as a measure of real integration into the

world economy (model 1). Based on Rogowski’s (1987) finding of a positive influence of a

country’s population on its number of electoral districts and, hence, a negative correlation

between country size and proportionality of the voting system, we include a variable that captures

population totals in millions. Contrary to Rogowski’s results, we obtain a positive association

between country size reflected in its population and the probability that a country uses PR. This

result notwithstanding, our result on the central variable – a positive association between trade to

GDP ratios and the use of PR – is in line with Rogowski’s original finding.

In model 2, we use a measure of trade integration that focuses on trade policy rather than trade

policy outcomes. Arguably, this is the more appropriate measure since our theoretical argument

maintains that PR provides a more conducive environment to liberalization of trade policies and

that it is this association that provides for the incentive to change electoral rules (see below). We

find a negative influence of our measure of trade policy restrictiveness, namely the weighted

mean of the applied tariff rate as provided by the World Banks World Development Indicators

(World Bank 2011).

Model 3 replicates these findings with an alternative trade policy variable, namely the KOF index

of economic globalization discussed above. Results are qualitatively identical to using the

weighted mean tariff rates. Higher integration levels as expressed by policy measures are

associated with greater probability of using elements of PR in a country’s voting system. Overall,

these results lend support to the propositions that a) countries that are more integrated into the

global economy in terms of trade flows are more likely to use PR, and, b) that countries

employing more open trade policies are also the ones using PR with higher probability.

We next turn to the change of electoral rules . Models 4 and 5 use a dummy variable as dependent

variable. This variable is denoted 1 if an event took place that rendered the electoral system more



18

proportional. We define such events as an increase in the mean district magnitude of the voting

districts for either House or Senate elections or both, as defined by DPI (Beck et al. 2001). The

intuition behind this is straightforward: If a country increases the number of representatives

elected per district this will lead to a more proportional electoral formula (Rae 1971). At the same

time, this method is very efficient as it allows comparing different countries with respect to our

central concern of whether or not a country changes its electoral rules. As independent variables,

we use a measure of global integration levels, namely the trade-to-GDP ratios in other countries

from the point of view of the country under observation. In both models, this measure is

positively and significantly related to the probability of an electoral rule change rendering a

country’s voting system more proportional. In other words: Countries that are relatively little

integrated compared to other countries are more likely to change their rules towards PR than

countries that already are highly integrated. This finding lends support to our argument about

opportunity cost concerns driving electoral rules changes. In both models, the variable that

captures the number of institutional veto players has the theoretically expected negative sign,

although the variable fails to reach conventional levels of significance in model 5. We cautiously

conclude that veto players may be a functional equivalent for more proportional voting rules

under conditions of globalization. Of course, this finding could also be explained by the fact that

any political change becomes less likely with more veto players and that this logic also applies to

changes of electoral rules. The important observation, in our view, is that the results on theinfluence of global integration levels hold up to the inclusion of the veto player variable.

To close the causal chain in our argument, we finally turn to the connection between

compensation, trade, and PR. Figure 2 shows simple bivariate plots of year against sample

averages of social expenditures as a percentage of GDP together with average yearly levels of

international trade (right axis). The data on social expenditure stem from the OECD Social

Expenditure Database (SOCX) (Adema/Fron/Ladaique 2011). The SOCX data cover a wide

range of social programs, including old age, survivors, incapacity-related benefits, health, family,

active labor market programs, unemployment, housing, and other social policy areas. We opted

to use this wide definition of social spending in order to capture the effects of trade and PR on

the credibility of compensation promises since such promises should be more important not only

for those who seek compensation for labor market displacement due to globalization processes,

but also, for example, to those seeking protection from health risks in a more volatile and hence

more unpredictable economic environment. Note that the data covers only a subset of our

country sample, namely the OECD countries.



19

Again, a clear pattern emerges. While overall trade levels increase (except for the drop in 2009

due to the world financial and economic crisis), average social protection is equally on the rise.

However, from 1990 onward, we observe that PR countries consistently outspend non-PR

countries – at the same time that international integration levels really began taking off. We take

this as evidence that promises to compensate losers from globalization processes are not only

more credible in PR political systems but that these promises are actually made good on.

How do these results hold up against the inclusion of other variables? Table 3 shows regression

results for models that use social expenditure (models 6 and 7), and government consumption

(model 7) as their dependent variables. The social expenditure data are available only for a subset

of OECD countries. We therefore chose to replicate findings from models 6 and 7 with a larger

sample, even if government expenditure is not necessarily proportional to social expenditures. In

all models, we find a positive and significant relation between openness of economic policies and

spending. Interestingly, only those countries that rely solely on PR as their voting rule are

positively associated with social expenditures, and government spending more generally,

respectively. The results on the controls are in line with earlier findings, namely that richer

countries spend more on social and other government services (see, for example, Chang 2002;

Legrenzi 2004), and that larger countries have relatively smaller public sectors (Alesina/Wacziarg

1998).

5. Conclusion

Ronald Rogowski (1987) has hypothesized about a “natural affinity between trade and PR”. We

have extended his hypothesis to the change of electoral rules in a way that makes them more

proportional. We have based our assertion on the problems inherently related to efficiency

enhancing policies that produce winners and losers in society, namely the problem of credibly

committing to compensate the losers. We have argued that PR systems are better able to credibly

commit to such compensation and that, hence, countries using PR should be better able to

integrate into the global economy. Because of this, we have argued, policy makers face an

incentive to adopt voting rules that are more proportional in order to better realize the gains

from trade. If voters care about the state of the economy and trade openness is efficiency

enhancing but hampered by uncertainty about one’s future state in a post-reform economy, more

proportional voting rules should mitigate this uncertainty by providing for a more credible

compensation. Most importantly, these efficiency considerations should be most pronounced in



20

situations where the opportunity costs of maintaining a closed economy are particularly high,

namely under globalized conditions.

We have backed up these assertions by first showing a positive association between PR and trade

shares on the one hand, and PR and openness of trade policies on the other. Second, we have

supported our theoretical argument by empirically identifying a positive association between PR

and social expenditures. Countries with a more proportional voting system spend more on social

protection and on government expenditures in general. Thirdly, our main link between trade

integration and a change of electoral rules towards more proportionality under conditions of

economic globalization is supported by the empirical evidence. We find a positive link between

openness levels in the world and the probability that a county renders its voting provisions more

proportional.

Future versions of this paper could, for example, investigate other possibilities of operationalizing

the opportunity costs of maintaining a closed economy. So far, we have focused on global

integration levels, which – in our view . is one valid measure. However, it might be useful to

identify some way to compute more ‘targeted’ measures that leave more variation across

countries (given a specific year). Such a measure could be based on the integration level in

specific regions or integration levels of all other countries but weighted by their distance or

existing trading patterns with the country under consideration.

A possible avenue for future research emerges from one observable implication of our theoretical

model that we have not tested in this contribution. If the logic of the compensation hypothesis is

right, liberalization of the trade regime should become more likely with more social spending

already in place. If indeed compensation is necessary to make integration politically feasible, one

should observe this pattern. Hence, it would make sense to analyze decisions to liberalize the

trade regime and test whether these are more likely under a higher social safety net. To our

knowledge there is no research that directly investigates into this straight-forward implication of

the compensation hypothesis.



21

References

Alesina, Alberto/Drazen, Allan (1991): Why are Stabilizations Delayed?, American Economic

Review, 81(5), 1170-1188.

Alesina A. and R. Wacziarg (1998), “Openness, Country Size and Government”, Journal of

Public Economics, vol. 69, no. 3, September, p. 305-321.

Adema, W., P. Fron and M. Ladaique (2011), “Is the European Welfare State Really More

Expensive? Indicators on Social Spending, 1980-2012; and a Manual to the OECD Social

Expenditure Database (SOCX)”, OECD Social, Employment and Migration Working

Papers No. 124

Beck, Thorsten, George Clarke, Alberto Groff, Philip Keefer, and Patrick Walsh, 2001. "New

tools in comparative political economy: The Database of Political Institutions." 15:1, 165-

176 (September), World Bank Economic Review.

Boix, C. (1999). "Setting the rules of the game: The choice of electoral systems in advanced

democracies." American Political Science Review 93(3): 609-624.

Calvo, E. (2009). "THE COMPETITIVE ROAD TO PROPORTIONAL

REPRESENTATION Partisan Biases and Electoral Regime Change under Increasing Party Competition." World Politics 61(2): 254-+.

Cameron, David R. (1978). ‘The Expansion of the Public Economy: A Comparative Analysis’,

American Political Science Review, 72:4, 1243–61.

Chang, T., 2002, “An econometric test of Wagner’s law for six countries based on cointegration

and error-correction modeling techniques”, Applied Economics, 34, 1157 – 1169.

Colomer, Josep M. , 2005, “It's Parties That Choose Electoral Systems (or, Duverger's LawsUpside Down)”, Political Studies, 53, 1-21.

Cox, Gary W., 1997. Making Votes Count. Strategic Coordination in the World's Electoral

Systems. Cambridge: Cambridge University Press.

Cusack, T. R., T. Iversen, et al. (2007). "Economic interests and the origins of electoral systems."

American Political Science Review 101(3): 373-391.

Drazen, Allan, 2001, : The Political Business Cycle After 25 Years, in, Bernanke, B./Rogoff, K.,

NBER Macroeconomics Annual 2000, Volume 15, MIT Press.



22

Dreher, Axel, 2006, “Does Globalization Affect Growth? Evidence from a new Index of

Globalization”, Applied Economics , 38, 10: 1091-1110.

Dreher, Axel, Noel Gaston and Pim Martens (2008), Measuring Globalisation – Gauging its

Consequences (New York: Springer).

Dreher, Axel, Noel Gaston, and Pim Martens (2008). Measuring Globalisation: Gauging Its

Consequences. New York: Springer.

Dunleavy, Patrick and Margetts, Helen (1995): “Understanding the Dynamics of Electoral

Reform,” International Political Science Review, 16: 9-29.

Duverger, M., 1954, “Political Parties”. London: Methuen.

Ehrlich, S. D. (2007). "Access to protection: Domestic institutions and trade policy in

democracies." International Organization 61(3): 571-605.

Evans, C. L. (2009). "A Protectionist Bias in Majoritarian Politics: An Empirical Investigation."

Economics & Politics 21(2): 278-307.

Fernandez, Raquel/Rodrik, Dani, 1991, Resistance to Reform: Status Quo Bias in the Presence of

Individual- Specific Uncertainty, The American Economic Review, 81(5), 1146-1155.

Grossman, Gene/Helpman, Elhanan, 1994, “Protection for Sale”, American Economic Review,

84(4), 833-50.

Grossman, Gene/Helpman, Elhanan, 2002, “Special Interest Groups”, Cambridge, MA, and

London, MIT Press.

Grossman, G. M. and E. Helpman (2005). "A protectionist bias in majoritarian politics."

Quarterly Journal of Economics 120(4): 1239-1282.

Hatfield, J. W. and W. R. Hauk (2010). Electoral Regime and Trade Policy. Working Paper.

Hellwig, Timothy, and David Samuels (2007). ‘Voting in Open Economies: The Electoral

Consequences of Globalization’, Comparative Political Studies, 40:3, 283–306.

International Political Science Review (1995). Special Issue: The Politics of Electoral Reform,

16(1).



23

Iversen, T. and D. Soskice (2006). "Electoral institutions and the politics of coalitions: Why some

democracies redistribute more than others." American Political Science Review 100(2): 165-

181.

Hall, Peter A. / Soskice, David W. (eds.), 2001: Varieties of capitalism: the institutional

foundations of comparative advantage. Oxford: Oxford University Press.

Katzenstein, Peter J., 1985, Small States in World Markets: Industrial Policy in Europe , Ithaka and

London, Cornell University Press.

Keefer, Philip /David Stasavage, 2003, “The Limits of Delegation: Veto Players, Central Bank

Independence, and the Credibility of Monetary Policy”, American Political Science Review,

97(3), 407-423.

Kydland, Finn E./Prescott, Edward C., 1977, ‘Rules Rather than Discretion: The Inconsistency

of Optimal Plans’, The Journal of Political Economy, 85(3), 473-492.

Legrenzi, G., 2004, “The displacement effect in the growth of governments”, Public Choice, 120,

191 – 204.

Lijphart, Arend (1999): Patterns of Democracy. Government Forms and Performance in Thirty-

Six Countries, New Haven: Yale University Press.

Magee, Stephen P./Brock, William A./Young, Leslie, 1989, Black Hole Tariffs And Endogenous

Policy Theory. Political Economy in General Equilibrium, Cambridge, MA, Cambridge

University Press.

Mansfield, E. D., H. V. Milner, B. P. Rosendorff (2000). "Free to trade: Democracies,

autocracies, and international trade." American Political Science Review 94(2): 305-321.

Martin, Christian W. 2005: Die doppelte Transformation: Demokratie und Außenwirtschaftsliberalisierung in Entwicklungsländern, Wiesbaden: VS Verlag.

Martin Christian W., 2009, “Towards an explanation of electoral rules change”, CEU Political

Science Journal , 4(2), 169-191.

Martin Christian W./Schneider, Gerald, 2007, “Pfadabhängigkeit, Konvergenz oder regulativer

Wettbewerb: Determinanten der Außenwirtschaftsliberalisierung, 1978-2002“ (“Path

Dependence, Convergence or Regulatory Competition: Determinants of Foreign Economic



24

Liberalization, 1978-2002”), Politische Vierteljahresschrift , special issue Transfer, Diffusion und

Konvergenz von Politiken, 449-469.

Milner, H. V. and K. Kubota (2005). "Why the move to free trade? Democracy and trade policy

in the developing countries." International Organization 59(1): 107-143.

Milesi-Ferretti, G. M., R. Perotti, et al. (2002). "Electoral systems and public spending." Quarterly

Journal of Economics 117(2): 609-657.

Naoi, Megumi/Krauss, Ellis 2009: Who Lobbies Whom? Special Interest Politics under

Alternative Electoral Systems, American Journal of Political Science, 53 (4), 874-892.

OECD (1987): OECD Economic Surveys. New Zealand; OECD, Paris

OECD (1999): OECD Economic Surveys. New Zealand; OECD, Paris

Persson, T. and G. E. Tabellini (2005). The economic effects of constitutions. Cambridge, Mass.,

MIT Press.

Rae, Douglas (1971): The Political Consequences of Electoral Laws, New Haven: Yale University

Press.

Renwick, Alan, 2010, The Politics of Electoral Reform: Changing the Rules of Democracy,Cambridge, MA, Cambridge University Press.

Rodrik, Dani (1998): Why Do More Open Economies Have Bigger Governments?, Journal of

Political Economy, 106 (5):. 997-1032.

Rodrik, Dani (1994): The rush to free trade in the developing world: why so late? why now? will

it last?, in: Haggard, S./Webb, S. B. (eds.): Voting for Reform: Democracy, Political

Liberalization, and Economic Adjustment. New York: Oxford University Press.

Rogoff, Kenneth. 1985. “The Optimal Degree of Commitment to an Intermediate Monetary

Target.” Quarterly Journal of Economics 100 (November): 1169–1990.

Rogowski, Ronald, 1987, “Trade and the Variety of Democratic Institutions”, International

Organization , 41(2), 203-223.

Rokkan, Stein, 1970, Citizens, Elections, Parties, Oslo, Universitetsforlaget.

Sakamoto, Takayuki, 1999, “Explaining electoral reform - Japan versus Italy and New Zealand”,

Party Politics, 5, 419-438.



25

Schmidt, M 2002 ‘Political Performance and Types of Democracy: Findings from Comparative

Studies’, European Journal of Political Research, 41(1):147–63

Stein, Robert M./Bickers, Kenneth M. (1994): Congressional Elections and the Pork Barrel, The

Journal of Politics, 56 (2), 377-399.

Steiner, Nils. D. (2010). ‘Economic Globalization and Voter Turnout in Established

Democracies’, Electoral Studies, 29:3, 444–59.

Steiner, Nils D./Martin, Christian W. (2012): Economic Integration, Party Polarization and

Electoral Turnout: Testing for a Causal Chain, West European Politics, 35 (2): 238-265.

Stratmann, Thomas/Baur, Martin (2002): Plurality Rule, Proportional Representation, and the

German Bundestag: How Incentives to Pork-barrel Differ across Electoral Systems,

American Journal of Political Science 46 (3): 506-514.

Taagepera, R. and M. S. Shugart (1989). Seats and Votes. The Effects and Determinants of

Electoral Systems. New Haven, Yale University Press.

Tsebelis, George. 1995. "Decision Making in Political Systems: Veto Players in Presidentialism,

Parliamentarism, Multicameralism and Multipartyism." British Journal of Political Science 25

(3): 289-325.

Tsebelis, George. 2002. Veto Players: How Political Institutions Work. Princeton, NJ: Princeton

University Press.

World Bank, 2011, World Development Indicators, Washington D.C., The World Bank.



26

Appendix A: Sample and definitions

List of countries using proportional representation, based on DPI (Beck at al. 2001). Bolded

countries fit the narrow definition of PR systems, meaning that their electoral system is based

exclusively on PR. Non-bolded countries may use elements of both PR and MV. Examples

include Germany or New Zealand after the 1993 electoral reform. Both the German and the

New Zealand system award voters two votes, on with which to vote for a party list (PR), the

other with which to vote for a candidate in a winner-take-all contest (MV).

Albania

Argentina

Australia

Austria

Belgium

Bolivia

Brazil

Bulgaria

Colombia

Costa Rica

Croatia

Cyprus

Czech Republic

Denmark

Dominican Rep

Ecuador

El Salvador

Estonia

Finland

Germany

Greece

Guatemala

Hungary

IndiaIndonesia

Ireland

Israel

Italy

Japan

Korea South

Latvia

Lesotho

Lithuania

Macedonia

Madagascar

Mexico

Moldova

Mongolia

Netherlands

New Zealand

Nicaragua

Niger

Norway

PanamaParaguay

Peru

Philippines

Poland

Portugal

Romania

Senegal

Slovak Republic

Slovenia

South Africa

Spain

Sweden

Switzerland

Turkey

Uruguay

Venezuela



27

Figures and tables

Figure 1: Average yearly integration in PR and non-PR countries

Figure `2: Levels of social expenditure in PR and non-PR countries

5 0

5 5

6 0

6 5

7 0

7 5

1970 1980 1990 2000 2010

Year

Average integration levels(KOF) in democracies using PR

Average integration

levels (KOF) in democracies not using PR

A v e r a g e

y e a r l y i n t e g r a t i o n l e v e l s ( K O F )

6 0

7 0

8 0

9 0

1 0 0

A v e r a g e y e a r l y t r a d e

1 6

1 8

2 0

2 2

2 4

A v e r a g e

y e a r l y s o

c i a l e x p e n d i t u r e ,

%

o f G D P

1970 1980 1990 2000 2010

Year

Average social expenditure (% of GDP) in democracies using PR (solid black line)

Average social expenditure (% of GDP) in democracies not using PR (dashed black line)

Average yearly trade (X+M/GDP) (solid red line)



28

Model 1 Model 2 Model 3

Trade (% of GDP)0.076***(0.014)

Tariff rate, applied(weighted mean)

-0.024**(0.010)

KOF EconomicIntegration (Policy

measures)

0.199***(0.022)

Population(millions)

0.039***(0.007)

0.034***(0.007)

0.033**(0.015)

Constant1.158***(0.433)

1.158***(0.433)

-9.363***(1.597)

N= 1562 921 1487Number of countries=

78 74 73

Years= 1975-2009 1988-2009 1975-2008 Wald chi(2) 44.18*** 22.59*** 95.46***

The dependent variable is a dummy variable denoted 1 if a country employs proportional representation and 0otherwise. Random effects logit regression with standard errors in parentheses.***: p<0.01; **: p<0.05; *: p<0.1

Table 1: Proportional representation, trade and trade policies

Model 4 Model 5

Average Trade (% of GDP; countries ≠ i)0.085***(0.034)

0.102***(0.034)

Trade (% of GDP; country i) 0.005(0.011)

KOF Economic Integration (Policy measures)-0.030(0.019)

Population (millions)-0.023(0.022)

-0.026(0.020)

Checks and balances (institutional veto players)-0.651**(0.328)

-0.491(0.308)

Constant-9.911***

(3.156)-9.090***

(3.033)N= 1437 1349

Number of countries= 77 72

Years= 1976-2009 1976-2008 Wald chi(2) 11.47** 14.57***

The dependent variable is a dummy variable denoted 1 if a country changed its electoral rules in a way that renderedthem more proportional and zero otherwise. Random effects logit regression with standard errors in parentheses.***: p<0.01; **: p<0.05; *: p<0.1

Table 2: Episodes of proportionalization and levels of globalization



Model 6 Model 7 Model 8

Country uses PR, wide definition (dummy)0.507

(0.581)Country uses PR, narrow definition

(dummy)2.601***(0.593)

0.964**(0.429)

KOF Economic Integration (Policy measures)

0.056***(0.020)

0.041**(0.019)

0.040***(0.012)

GNI (PPP)-4.24e-13***

(1.39e-13)-1.60e-131.21e-13

-3.35e-13***(8.88e-14)

Per capita GNI, PPP0.0001**(0.00005)

0.000070.00005

0.00009***(0.00003)

Constant12.212***

(1.806)12.783***

(1.733)12.487***

(0.808)N= 656 656 1334

Number of countries= 29 29 72 Years= 1980-2008 1980-2008 1980-2008

R(2) 0.5212 0.5105 0.4892

Wald chi(2) 14.99*** 29.75*** 33.38*** The dependent variables are the percentage of social expenditures of GDP (models 6 and 7), and the share of government consumption of GDP (model 8). Prais-Winsten regression assuming an AR(1) process in the error term;panel corrected standard errors in parentheses.***: p<0.01; **: p<0.05; *: p<0.1

Table 3: Social expenditures and government consumption, trade, and PR

martin steiner midwest2012 globalizationelectoralrules

Documents