Do Elections Slow Down Economic Globalization Process in India? It's Politics Stupid!

Abstract

I investigate whether timing of the elections impact economic globalization process or not in India. In other words, do elections slowdown economic globalization process? The theoretical underpinning is that, policies of economic globalization lead to economic and social hardships in short run but benefit the economy in the long run. The motto behind slowing down the economic globalization process before elections is that it leads to polarization of voters and thus negatively affects the incumbent government. I make use of Axel Dreherís economic globalization index and construct ëinstrumental electoral cycleí to capture the scheduled and midterm election cycle. Using time series data for India for the period 1970 ñ 2006, I find that scheduled elections are associated with slow down in economic globalization, whereas midterm elections are not. Replacing Dreherís economic globalization index with our modified globalization index does not alter the results. I also find that slow down in economic globalization process is responsive to the propinquity to a scheduled election year. Meaning, as incumbent government nears the scheduled elections, economic globalization process keeps slowing down, while this is exactly opposite during the early years of incumbent government in office. These results suggest that elections generate ìelectoral globalization cycleî in developing democratic country like India.