Political Liberalization and State Capture by Business Interests

Francois Bourguignon, Perrin Lefebvre and Jean-Philippe Platteau

No 19855, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Motivated by observations from three African countries, we explore the relationship between political competition and state capture when business leaders can fund political candidates’ campaigns to enhance access to a rent. A surprising result is that, with a unified business sector, and with a given rent, the risk of capture first increases with the number of candidates, before decreasing and then vanishing. With multiple firms sharing the rent, capture is enhanced or attenuated depending on the credibility of politicians’ promises and firms’ rivalry. An important policy implication is that to limit state capture political liberalization is better postponed until after economic transformation is well under way.

Keywords: Campaign finance; Political liberalization (search for similar items in EconPapers)
JEL-codes: D02 O43 P00 P50 (search for similar items in EconPapers)
Date: 2025-01
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