Home / Research / Cluster 1 / Theme 3

Economic analysis of political institutions

Contact Bocconi University for this project

Guido Tabellini
Full Professor
Department of Economics
President of IGIER Bocconi Research Centre on Economics
Bocconi University
Via Salasco 5, 20136 Milan, Italy
guido.tabellini@unibocconi.it




Bocconi University
The subject under study is the functioning of political and governmental institutions, and their economic impact. The focus is both on formal aspects (democracy versus autocracy, type of democracy) and informal ones (the role of values and beliefs in shaping the functioning of government institutions). The subject under study is the functioning of political and governmental institutions, and their economic impact. The focus is both on formal aspects (democracy versus autocracy, type of democracy) and informal ones (the role of values and beliefs in shaping the functioning of government institutions). Regarding the first set of aspects, during the past few years several scholars have put effort to address the question of constitutional effects on economic policy and economic performance. However, a number or relevant research questions are still open. For instance, can we really blame the poor and volatile economic performance of many countries in Latin America on their presidential form of government? More generally, what are the economic effects of constitutional reforms? Knowing the answers to these types of questions is important not only for established democracies contemplating reform, but also for new democracies designing their constitutions more from scratch.

For what concerns the second set of aspects, the starting point is the observation that economic backwardness is typically associated with a large range of institutional, organizational and government failures, along many dimensions. The political-economy of growth seeks to explain effect of history on institutions as a political and economic equilibrium: powerful groups and individuals shape evolution of institutions to keep their rents. However, several outcomes are difficult to explain only in terms of distribution and economic incentives. Such outcomes also result from behaviour of public officials, or of private individuals inside firms or public organizations. For instance, incentives are less important inside bureaucracies, where output is difficult to measure and competition is weak.

Relevance to future of European societies
Alternative ideas of how to address inefficient decision-making and the ¿democratic deficit¿ in the European Union, involve constitutional reforms introducing clearer principles of either parliamentary or presidential democracy at the European level. The constitutional discussions often concern the alleged effects of constitutional reforms on economic policy and economic performance.

On the other hand, the idea that culture is an important determinant of institutional and economic outcomes also has relevant policy implications. If confirmed by future research, the main findings suggest that income transfers and public investment are not a solution for the low labour productivity of economically backward regions of Europe because they don¿t address the source of the problem. Instead, these regions are likely to benefit from investments in education, and from decentralization of administrative and political powers (to stimulate the accumulation of social capital).

 
© 2009 - 2011 RISE Network