Interest Group Dynamics in Developing Countries: An Empirical Comparison of Brazil and India
Vineeta Yadav
PhD, ’06, Yale University
Department of Political Science
Prepared for the Comparative Political Economy Workshop at Harvard University
Oct 7-8, 2005
Abstract
This paper presents a model of special interest group behaviour in developing countries. It argues
that interest groups display different lobbying patterns across political systems as a result of variation in
institutional incentive structures and voter preferences for parties or candidates. In systems, which give
parties control over the career prospects of their members, lobbies target political parties for their efforts. In
systems which the careers of members are not controlled by their party, lobbies target individual members.
The paper discusses a screening model which derives the conditions for these outcomes. It then presents
some preliminary evidence from a survey of interest groups in Brazil and India to test this theory. The data
broadly support the theory. Further statistical analysis is needed to estimate the exact impact of different
institutional features.
1
Lobbying is a term that evokes strong reactions from people in most countries. Some consider it an
inevitable human element, whether good or bad, of any functioning democratic or non-democratic political
system1. Others view it as unethical behaviour that subverts the ability of a political system to be
representative, weakens parties and leads to corruption. Hence, it should be stamped out2. Yet others argue
that lobbying an essential component of a democratic political system, a link between the political
establishment and its citizens through which ideas, information, grievances and policy feedback maybe
exchanged in an accessible, transparent way3. Another view argues that all systems, democratic or not, will
see similar lobbying on some issues as the nature of the issue itself drives lobbying behaviour4. Consider
the repercussions if these different views were to dictate policy on political and economic reforms. Under
the first view, lobbying is to be tolerated though not necessarily encouraged. The second view, would
advocate a ban on lobbying as part of efforts to eradicate corruption and encourage representation. In the
third view, the existence of a vibrant, transparent system of interest representation would be a vital and
urgent complement to any reform efforts especially those promoting transparency in politics and
policymaking. While the last view advises dealing with lobbying on an issue by issue basis.
Why are there such divergent views on the role that special interest groups play in society and, on
the normative impact of their behaviour on its welfare? Are these differences in opinion caused by
differences in lobbying patterns across systems? By differences in the impact lobbies can have on policy in
different systems? Or, are they driven by differences in the nature of the issue under discussion? Do these
diverse opinions stem from genuine normative differences in opinion about the role of interest groups in
society despite similar behaviours of lobbies across all political systems?
I approach these questions by arguing that lobbies embedded in different institutional frameworks,
see fundamentally different lobbying behaviours, independent of the issue. The institutional ambience
shapes the incentive structure of all political agents in that system. They determine the identity of the actor
who controls the careers of party members in that system. In systems with party centered designs this actor
is the party, thus lobbying is directed at political parties, not individual politicians. In systems with
individual centered designs this actor is an individual politician, thus lobbies target individuals with specific
attributes, not political parties. In party centered systems, lobbies strengthen the parties and, in individual
centered systems they weaken the party system, thus leading to different political consequences. In the
former, policy will be less driven by interest group preferences, in the latter it will be more led by lobby
preferences, thus leading to different policy consequences.
1
2
Toqueville, Chanakya
3
4
Kennedy, Scott business of lobbying in china 2005
2
For the project, I use original survey data from Brazil, China and India to test the validity of these
hypotheses for these three countries. In this paper, I just discuss Brazil and India. As predicted, I find that
interest groups do in fact lobby political parties in India, and individual politicians in Brazil. These results
are supported across a range of six issues – trade, financing, labour, foreign exchange, taxes and
environment thus proving that the nature of the issue itself does not change the venue for lobbying in a
country. The strategies are also robust across the categories of public and private goods. By looking at
assessments of success of failure on these different kinds of goods, we get insight into the degree of
influence interest groups exert for different kinds of goods across systems. This theory provides us with a
persuasive explanation for the diversity of views presented on lobbies, their social functions and their
impact.
My project engages in this discussion by asking three basic questions. One, which features and
functions of the electoral and legislative design of the system drive the choice of lobbying target, party or
individual politician, in that system? Two, what impact does this choice have on the relationship between a
political party and its members? Three, is policy relatively more or less influenced by special interest
groups in a system where the lobbying venue is the political party compared to one where it is the
individual? I also address a key alternative explanation that the literature offers for differences in lobbying,
differences in the nature of the issues addressed. The point of view argues that it is the issue that determines
lobbying strategies which are similar across political systems, not political institutions.
I argue that institutions shape the behaviour of lobbies in ways that are fundamentally different
across different systems. I show that the appropriate venue choice for lobbying depends on whether that
political system itself is party centred or individual centred. The system equilibria is driven by voter
preferences for parties or candidates and by three functional features delivered by the institutional
arrangements of a system: 1) The degree of party control over rents from holding office; 2) the opportunity
costs to members of being loyal to one’s party; 3) the severity of informational asymmetries between the
party and its members as represented by the share of heterogeneous electoral districts in the country.
Different permutations of institutions may deliver similar functional performance. For this project, I treat
these four factors as exogenous to ensure tractability, but in future work, I plan to develop a more complete
model that can endogenize some of these factors. Political systems whose features combine to give parties
substantial control over their members’ careers create party-centered systems, whereas those that undermine
party capacity to do so create candidate-centered systems. In party centred institutional systems, lobbies
target parties and reinforce the party’s dominance in that system. In individual-centred systems, lobbies go
to individual politicians they consider desirable, thus further undermining the party’s weakness in that
system. This behaviour by lobbies is derived endogenously in the model.
3
The approach I use to address these questions engages with three key debates. The first is the
debate on institutional factors that shape the behavior of special interest groups and their political and
policy consequences. However, instead of considering venue choice by lobbies within a single country as is
typically done in the formal literature, I investigate this question in a comparative context. This allows me
to address a second debate, one on the distinctions between the political behavior of key actors in party and
candidate centered systems. The third debate concerns the relative importance of political versus economic
factors in determining business-government relations. I pay special attention to the role played by different
kinds of information asymmetries between a party and its members typical of developing country political
environments. I discuss the specific nature of political information asymmetry that exists between parties
and their members in developing countries and develop a model tailored to this situation. Lastly, the case
studies provide rich, nuanced insights into the functioning of lobbies, the perception of legislative policymaking process among interest groups and on lobbying practices for a set of important policy issues in these
important developing countries. This is especially true for India where the last comprehensive study of
business interest group - political interaction was a qualitative study by Stanley in 1974.
State of Current Research
The study of special interest groups (SIG) and the role that they play in the political and economic
fortunes of a country has been an active research area across the political science, economics and business
fields. The foci of interest in these literatures, the methodology and the data marshaled have differed
somewhat. The political economy literature in economics has contributed a large share of the formal
models which have then been complemented by in-depth case studies by political scientists.
The economics literature has focused on the mechanics of interest group formation (Olson 1965),
the impact of individual institutions on the nature of interest group activity (Baron and Ferejohn 1989,
Ferejohn, Fiorina and McKelvey 1987 Baron and Myerson 2001), and the normative analysis of their
impact on welfare (Bates 1980, Becker 1983, Tullock 1980, Dixit, Grossman & Helpman 1997, Besley and
Coate 1997). The research trends in these fields can be summarized as being conducted along the following
lines.
I. Categorizing SIG behaviour by the identities of actors involved in the relationships -- Political party –
SIG, Candidate (pre-electoral) – SIG, Legislator (post election) – SIG, Government – SIG and,
bureaucracy and SIG. First, political party – SIG, these are usually models of pre-electoral lobbying in a
two party setting which look at impact of lobbying on party platforms, election and policy outcomes.
(Persson 1998, Grossman & Helpman 1994). Two, government – SIG, these models study the impact of
lobbies when their efforts are targeted towards a specific government already in power. The focus is on
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impact of number of lobbies and different kinds of resources on policy outcomes (Alt et al. 1999, Aidt
1998). Three, candidate (pre-electoral) – SIG, these models focus on lobbying of a candidate by multiple
lobbies (Gerber 1998, Baron 1994, Prat 2001). Four, legislator (post election) – SIG, models capturing
interaction between legislators and lobbies varying between single legislator and multiple lobbies and,
single lobby- multiple legislators (Snyder 1991, Persson, Roland & Tabellini 2000, McKelvey &
Riezman 1991). Government – business: Models studying interaction between business lobbies
specifically and the government tend to be non-formal and case study oriented in Political Science
(Schneider 1998, Schmitter 1971, Wilson 2003, Rama & Tabellini 1998, Kochanek 1986). Bureaucracy
– SIG: Look at the decisions of politicians to delegate policy authority to bureaucrats in the context of
SIG activities (Sloof 2000) the value of different resources used by lobbies when lobbying bureaucracies
(Mazza & van Winden 1997)
II. Categorizing by key relationships: These are – the interaction between lobbying and elections,
interaction between lobbying and legislation and the interaction between elections and legislation in the
context of lobbyists. The interaction between lobbying and elections -- mostly addresses questions
about the determinants, role, impact of campaign finance on party platforms. (Bennedson 1998, Baron
1994, Grossman & Helpman1996). The interaction between lobbying and legislation – Studies the
interaction of various legislative features such as agenda control, committee structure, etc and SIG
behaviour (Myerson 2001, McKelvey & Riezman 1991, Besley & Coate 1997). Interaction between
elections and legislation in the context of lobbyists has been analyzed by Chari, Jones & Marimon 1997,
Austen-Smith & Banks 1988.
III. Analyzing the impact of different resources that lobbies can potentially provide. These include primarily
– campaign funds (Austen-Smith 1987; Baron 1989, 1994; Snyder 1990, 1991; Grossman and Helpman
1994, 1996), information (Calvert 1985, Austen-Smith and Wright 1992, Austen-Smith 1995, Lohmann
1994, 1998, Ball 1995, Laffont 1999, etc) and, votes (Leighley & Nagler 1992, Filer, Kenny & Morton
1993). Austen-Smith 1995, Lohmann 1995 and Bennedson and Feldman 2001 consider how interest
groups can choose to offer both information and contributions depending on their relative preferences.
There is clearly overlap between these various categories.
Most of these economic models tend to frame the interaction at the time of election as taking place
between parties and the interaction at the legislative stages is usually modeled as taking place between
individual politicians. This choice of actors at each stage is never justified in these models. This is the first
major shortcoming in this literature. This bias may stem from the dominance of modelling for American
political realities. However, for political scientists, this immediately presents a problem. From the
discussion in the comparative politics literature (Carey and Shugart 1997) we know that neither of these
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assumptions can be made across the board even for just the electoral stage. Some institutional
configurations will make party competition an accurate reflection of the political reality confronting
lobbies. But, in other institutional systems, the elections will be primarily between candidates, not parties.
These models therefore, may not be the most relevant theoretical tools for these cases.
In this project, I
show when this is the case and then show that the assumption of competition between individual legislators
cannot be assumed by default at the legislative stage either. This may be the right tool for some systems but
it will not be the right tool for other systems which have strong parties. My model addresses this gap by
deriving the institutional structure under which the correct assumption at the legislative stage is inter-party
competition, and those under which the correct assumption is individual competition. The nature of
competition matters for all the tools that lobbies can use such as contributions, information and
demonstrations. For example, the interaction between legislators and SIGs when SIGs can offer valuable
information is conducted without analyzing how the possession of valuable information by the candidate
affects his relationship with the party and his standing within it. This is a comparative statics analysis. This
is an important blind spot in the literature on this subject.
Second, the literature in economics has not devoted much effort to studying how the interaction
between SIGs and candidates affects the interaction between SIGs and parties and, most importantly
between parties and member candidates. Similarly, impact of the interaction between SIGs and parties is
incomplete without analyzing its impact on the party’s relationship with candidates. This leaves us with
theoretical results on special interest politics that seem to essentially be comparative statics since they hold
these key relationships constant during analysis. While discussions of interest group behaviour in the
political science literature do discuss this relationship, they do not embed it in its institutional context. Thus,
the assumption is always that lobbying weakens parties because it provides candidates with independent
resources. The model I present addresses the shortcomings in both literatures by analyzing the impact of
lobbying on the party-member relationship conditional on the institutional context it is embedded in
allowing for both possibilities.
The political science literature has studied the impact of lobbies by categorizing SIG behaviour by
its structural and behavioral manifestation. Thus, interest group dynamics have been cast in the following
framework – pluralist, societal – corporatist, state- corporatist, clientelism and, monism. A pluralist system
is one in which firms lobby through voluntary, autonomous associations which may or may not be
hierarchical, and their relationship with the state is competitive5. They may or may not ally with other
groups in accordance with their needs but there is competition among different groups to represent similar
interests. This behavioral mode assumes ease of access in the system for members to articulate their
interests. The US and Western Europe are cited as examples. In societal-corporatist arrangements, firms
5
Dahl, Robert Who Governs? Yale University Press, 1961
6
defer to associations for representation, there is continuous voluntary bargaining between the interest
groups, bureaucracies and parties to coordinate goals and build consensus. In contrast to the bottoms up
approach of pluralism, societal – corporatism maybe characterized by both top-down and bottoms up
influence. Scandinavia and East Asia are frequently cited as examples. In state-corporatist structure,
influence and policy flow from top down. Firms follow the orders of and report to associations,
membership is usually required, associations are hierarchically structured with a monopoly on
representation in their functional area and the relationship with the state is cooperative. E.g. Brazil from
1930s through 1970s6. In clientelist patterns of interest representation, firms manipulate associations to
benefit themselves and their patron and their relationship with the state is characterized by cooperation with
a specific state patron. The bases of these relationships are personal ties, clan and caste connections and
informal networks. Transactions can cross over to illegal deals7. India in the 1970s and Ghana provide
examples. Lastly, monism, in which the state directly organizes society into different groups based on its
identification of common interests and goals. Organizations are hierarchically ordered; membership is
required and has monopolies over their jurisdictions. The control over society that is aimed for in Monism
is what differentiates it from state-corporatism. This was the model that Mao’s China implemented8.
As methodology, political science has usually tended to adopt qualitative and case study oriented
approaches to study interest groups. Some notable exceptions to this methodology are Deirmeir and Merlo
1999, Shepsle 1981. Research in this field has been dominated by work on the American lobbying system
and the richest flow of theory and empirics have come from American studies with a few from other
developed countries (Alt et al. 1999 and Liebert 1995). Some notable exceptions to the developed country
analysis are studies of East Asian groups by Haggard 2000, of Brazilian groups by Schmmitter 1971,
Schneider 1998 and Kingstone 1998, of Chinese interest groups by Pearson 1997, Kennedy 2005, of
Russian groups by Solnick 1996, of Indian groups by Kochanek 1974, Rudolph & Rudolph 1987 and of
Latin American groups by Frieden et al. 1997. All of these, however, are in depth case studies which
incorporate a great deal of detailed analysis on their specific cases but do not provide theoretical
frameworks that can be generalized to study a larger set of countries. The empirical literature in both
economics and political science has used extensive survey data for its analysis primarily from the US
(Schlozman and Tierney 1986, Nownes & Freeman 1998) to study operational lobbying behaviour and
interest group-legislator behaviour. These different methodologies from the two fields have shed light on
different aspects of the role of SIGs in political economy.
6
7
8
Schmitter, Phillipe 1971. Interst Conflice and Political Change in Brazil. Stanford University Press, 1971
Kennedy 2005. The Business of Lobbying in China, Harvard University Press. Pearson 1997
7
What is noticeably absent from these lists however, is a model that incorporates the strategic
interactions between special interest groups (SIGs), political parties and political candidates and, does so in
the context of elections and legislation. These are two important gaps. The first has already been discussed.
A second theoretical shortcoming in both literatures is that of analyzing the electoral and legislative
stages in isolation from each other. This problem, due to analytical intractability constraints, is true for
political economy models for a lot of other interesting phenomenon but is especially expensive in models of
SIG behaviour because the nature and value of the tradeoffs faced by actors between the electoral and
legislative stages cannot be held constant across political systems but is in fact determined by them.
Analysis such as Carey and Sugar 1997 repeat this error in the non-formal comparative literature where
tractability is less of a constraint. Their work derives the behaviour of political systems as being party or
candidate centered based solely on electoral rules. Analyzing systems in isolation from each other is the
political equivalent of deriving partial equilibrium results for the two individual markets but stating them as
the outcome of general equilibrium behaviour of the entire political system. Consider how these incentives
maybe modified by the legislative rules. How would a system which affords party weak control over
members at the electoral stage but gives them complete control over the allocation of legislative rents, be
classified under such a partial analysis? Similarly, a system classified as party centered at the electoral
stage could be weakened considerably by legislative rules which give individual legislators the capacity to
deliver to their voters. While it is true that legislative rules may be endogenous and can be altered to suit
party whims when parties dominate the election stage, it is equally true that electoral rules are endogenous
as well and can be altered by strong legislators to strengthen their positions at the electoral stage relative to
the party. These involve rules regarding accepting campaign finance from corporations, media use by
supporters, sharing of election expenses by party and candidate, recognizing defections, etc. These rules are
established by the legislature and can be modified by them with significant repercussion for subsequent
election prospects. Therefore, this debate must be addressed by looking at the source of the capacity of
both sets of actors to endogenize these actions – the institutional rules and voter preferences for actors. To
study these relationships comparatively across systems, one must model the set of incentives presented by
the system in its entirety. My model provides one technique for integrating both components into a single
system to study its cumulative impact on political behaviour.
The third gap that this project attempts to address is that of the paucity of formal models that analyze interest
group dynamics in developing countries. The discussion up to this point has not differentiated between the political
environments of developed and developing countries. This distinction however, can be important in analyzing political
behaviour to the extent that it coincides with the incidence of information asymmetries between parties and their members
that are either not present or not acute enough to be critical in developed countries. I argue that in countries with similar
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institutions, information asymmetries between different actors create different strategic environments The political
environment as I define it here consists of political information which is of strategic value to all political actors. The
following seven fundamental differences discussed below can be considered to be the most important. For this project I
am focusing on developing a basic model which takes into account only the first three of those mentioned here.
First, is the problem of campaign financing that is opaque to extra party actors. In most developing countries,
there are either no legal requirements or very poorly enforced ones imposed on interest groups to report campaign
contributions made by them to anyone and, on politicians and parties to report funds received by them. Thus, the
magnitude, prevalence and manner of political contributions by lobbies are not well understood. Lobbies from different
segments of the polity are left to speculate about the strength and political investment strategies of the interest groups they
are competing against. Weak or politicized legal systems undermine the capacity of civic organizations to elicit this
information. While it is widely known that contributions are made by industrial houses, ethnic and religious groups,
among others, the structure of this behaviour is not well understood. There are generally very poorly enforced rules on
important aspects of campaign finance such as limits on campaign spending by parties and politicians, rules to govern the
expense sharing between a party and its candidates in any give election and credible documentation of contributions
received and expenditures made9.
These factors combine to lead to widespread perceptions and incidence of electoral funding fraud10. This
problem is further exacerbated in the post-election period when the procedures for presenting party accounts are less
demanding and public scrutiny not as intense or engaged as during an election period. The extent to which party finance
influences legislative behaviour is even less understood for these countries. Frequent exposés involving allegations of
politicians selling their vote to opposing parties on specific issues or on motions of confidence lend anecdotal support to
claims that this forms a significant potion of the political investments made by interest groups and by parties11. What is
important for this project is that these are matters involving the structure of external financial relationships of political
actors and between external political actors themselves. This includes the information which political parties and
candidates have on other parties and candidates as well as information which interest groups have on the strategies of
other lobbies.
Second, is the problem of campaign financing that is opaque to actors within the party itself. Given the laxity of
reporting and disclosure rules and practice, even the party and the candidates are not aware of the magnitude of SIG
support enjoyed by other candidates within the same party or by the party as an entity as known to the leadership. Thus, it
is entirely possible for a candidate to claim to the party leadership that he is bereft of funds and unable to help out his
9
IDEA website on financing in developing countries, get some summary statistics
Wbes data on electoral fraud by firms, other corruption data from some study on general public’s
perception of political corruption
11
Don’t put in aaya ram gaya ram or lula’s current travails, try to get examples from other countries in the
intro and in the country specific discussion you can say why these cases fit the general profile.
10
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financially stranded party which then has no method for verifying the veracity of his claims. Similarly, the candidate can
be credibly told that the party is overstretched and unable to support his particular campaign due to lack of lack of means
rather than lack of will. This lack of internal transparency is an important aspect of developing country politics which has
strategic ramifications for all actors and plays a big role in the model that I present in this project.
Third, information asymmetry on strategic political information between a party and its members. This stems
from two sources, one common to all environments, and the other specific to developing country environments. The first
reason is lack of information such as polls and surveys on electoral popularity and electoral issues. This is information
that is considered essential and basic to political strategizing by parties and candidates in developed countries but is rarely
widely available in most developing countries. Opinion polls, exit polls, regular public and voter surveys are not an
established part of the information structure of the polities in many of these countries and lack credibility and
acceptability where they do exist12. A lack of tradition of collecting and using this kind of information, compounded by
low literacy rates, restricted access to radio or TV news and government control of existing media makes this kind of data
gathering unreliable and expensive. This environment makes it hard for outsiders such as polling agencies to gather this
kind of information and to make it commercially available to any interested buyer. These data collection problems can
also cast doubts on the utility of the information that is finally available. Leaving aside the problem of data collection,
there is also the issue of who would be the optimal interpreter of local information. This is a universal problem which
always favours the local actor who knows local culture and politics. The use of statistical data for analysis of voting
behaviour by parties as part of campaign strategy is a relatively rare phenomenon in developing countries13. This means
that the party leadership and candidates are mutually dependent for basic political information on the degree of support
enjoyed by each as well as for public opinion on various election and national issues. This problem has been compounded
by the perception of persistent incorrect predictions by exit polls and allegations of under-sampling rural population in
countries which are still overwhelmingly rural. Thus, there is an information asymmetry between parties and their
candidates during an election that usually favours the candidate. He is usually better informed about the degree of support
enjoyed by various parties in his district as well as the local political relevance of campaign issues.
I discuss the last four briefly. Fourth, the nature of the bargaining and the level of policy changes that are being
negotiated in exchange for contributions are not well understood. This party stems from the behind the door vaguely
legal nature of lobbying in some of these countries as well as a paucity of empirical research. Fifth, the degree to which
information is being peddled as part of the bargain in these countries is also not well understood. This is important
because the liberalization of information is a critical consequence of both economic liberalization and of
democratization. Economic liberalization of an economy requires liberalizing economic and financial information as
12
You need to support this claim with data about familiarity with surveys, reactions to surveys, and
quotations. You can quote the CSDS experience of a well reputed nationally known survey outfit in today’s
cable enabled, internet enabled world getting thrown into jail for asking “suspicious questions”! Mind you
this was in the city, not in some rural backwater of India. Reiterate the literacy rates, access to TV, radio
news and the largely rural nature of these populations.
13
Cite some magazine reports and interview with Javedkar
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well as political information. In transitions to market based systems, political actors and the government rely
considerably on private sector actors to provide them with technical information and expertise for new policies as well
as feedback on their implementation. This provides interest groups with a very valuable tool. Surveys of lobbying
behaviour in the US, UK and the EU show that information is listed by politicians as being among the most valued
contributions by lobbies. To what extent this characterizes the relationship between interest groups and politicians in
developing countries is a question which can shape our positive understanding of interest group and allow us to analyze
the normative implications of their behaviour.
Sixth, the relative extent to which different segments of the political and bureaucratic establishment are being
lobbied is not known. The important distinction here is that between lobbying resources devoted to cultivating politicians
versus those devoted to bureaucrats because this reflects the perception of the interest groups as to where the locus of real
policy power exists in that government. It also indicates where the more costly bottlenecks in policy are, in the
formulation or the implementation. In countries where discretionary powers by bureaucrats are high, lobbies may choose
to devote a larger share than usual to bureaucrats than to legislators for formulation. While there are anecdotal studies
conducted primarily by business organizations and journalists and country –specific cases by academics, there have been
few attempts to develop theoretical models for developing countries.
Lastly, knowledge of and information about the impact of economic reforms and its outcomes can differ
significantly across sectors due to differences in sector-level historical legacies, cognitive biases and differences in
learning curves created by differing international exposure faced by sectors and different ownership patterns. This may
create very different strategic imperatives from those commonly postulated for rational actors in a reforming environment.
Therefore, even when the electoral institutions and legislative rules may seem similar to developed countries these seven
factors may cause strategic behaviour by all actors to be very different in these developing countries.
The empirical characterizations of interest group activities in developed country environments
frequently do not describe those of groups in developing countries. The main activities that lobbies engage
in the US e.g. are political contributions to campaigns, sharing of technical information with the staff of
legislators and relevant government bureaucrats, testifying before Congressional Committees, drafting
policy proposals and providing legal advice14. However, in developing countries only a small subset of
these activities is actually carried. Political contributions may or may not be legally made, Congressional
hearings may or may not be open, legislators may or may not have their own staff, information may or may
not be useful to legislators who may or may not care about legislative activities15 and, legal advice may or
may not be of great concern due to lax legal systems. This narrows the ways in which interest groups can
14
15
Schlozmand and Tierney 1986
A Suryaprakash
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make themselves useful and valuable to political actors. This creates different operational environment
where lobbies only have a limited number of tools available to them and hence, strategize accordingly.
Theoretical Model
I use a screening model to structure the theoretical framework for the study. The relevant actors are
political parties, individual party members, voters and special interest groups. The problem is framed as a
contract design problem where the contracts are signed prior to the realization of a random shock. At the
beginning of an election campaign, parties observe their relative popularity and the preferences of voters on
the ideology and key electoral issues. Based on this each party announces a party platform. The party
expects its members to by loyal to the party and campaign in their districts for the party platform. However,
the parties are handicapped because they do not know the specific electoral challenge faced by each
candidate in his own district. The candidate knows the distribution of preferences of voters and his party’s
popularity in his district. Due to the poor availability of public sources of information on these aspects
however, the party is not as well informed. Each candidate wants to get elected and wants to stay loyal to
his party. However depending on the preferences of his voters, his party’s platform may not be the winning
platform in his district. So, he must now decide how much he values a victory. The problem is not this
simple however.
The party faces the same tradeoff. It knows that there are districts where its platform will not be the
most popular one but it does not know the identities and share of these districts. It is worried that if too
many candidates choose to deviate from its platform, it will lose the election as a direct consequence of this
behaviour since voters care about party unity. It is also worried that if it finds itself composed of mostly
disloyal members more interested in their own personal victory than in the party’s, then any win might
prove to be a pyrrhic one. Once it office, it will not be able to trust policy to these disloyal members as they
will manage it to their own ends. In the long run, this will hurt the party’s prospects as it will end up being
both incoherent due to large deviations by its members from its platforms and ineffective, due to its
inability to deliver the promised policy to its voters.
To overcome these problems and to inspire the right kind of behaviour, the party devises a set of
rules on how it will reward or penalize members after elections by judging them based on the loyalty they
display to the party during elections. These rules involve evolving criterion for loyalty based on the
observed deviation of party members from platforms. The party will observe the distributions of deviations
and heterogeneity after elections are held. The set of contracts it designs at the time of announcing its
platform, promises payoffs conditional on the realization of this information in the future. It promises to
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allocate the benefits of office to members it judges to be loyal based on this criteria. It promises to withhold
benefits, thus penalizing members, who it classifies as disloyal. These contracts are announced at the same
time as the party announces its platform in the campaign period.
At the time the party announces its electoral platform and its set of contracts, each of its candidates
knows the characteristics of his own district. Therefore, based on how much he values a victory given the
penalties he could face, each candidate decides how much to deviate from the party’s platform. After
elections, everyone observes the distribution of deviations, the performance of the party in the elections and
the identities of winners and losers. The party now implements its plan and rewards and penalizes members
according to their behaviour.
The equilibrium outcome in this game will depend on the party’s ability to design the right kind of
contracts. If the party is successful, it will be able to design contracts which separate out the loyal and
disloyal candidates. If the party fails to design the appropriate contract, then it will not be able to separate
out the disloyal candidates. This means that some share of its spoils of victory will be managed by disloyal
members who will use it to further their own careers rather than their party’s. It also means that the party is
paying out more of its office rents in information rents to its members than it would in a separating
equilibrium. Thus, the party will be weakened fundamentally despite electoral victory. Over time, the party
will be neither coherent as it will suffer from large deviations nor popular as it will fail to deliver on its
promises to voters.
Therefore, the ability to design contracts which create a separating equilibrium is
crucial to the vitality of the party. This will be true for all parties in the system.
This ability is determined by three institutional factors. These are the extent of control a party has
over allocation of its share of rents from holding office, the opportunity cost of being loyal to one’s party
and, the effective heterogeneity produced by electoral rules.
First, the capacity of a party to control the allocation of its own rents. When a party wins seats in
the legislature, it is entitled to certain valuable spoils of office. These include shares in procedural chamber
posts, in legislative committee seats, in nominations for non-elected posts, free media time, secretarial
resources, etc. These benefits are strengthened by rules which govern the role of the party in the
introduction and passage of bills and amendments, rights to recognize members on the floor for various
purposes, etc. These rules determine how members can gain access to the legislative process and thus, to
the executive office and to the media. The more control the institutional rules give to the party, the higher
its exclusive capacity to dangle these carrots in front of its members. Consider a system where members
can introduce bills on their own without party support, have to purchase their own media time, can gain
chamber posts through elections by the full floor. In this system, the candidate does not have to rely on the
13
party to be an influential and effective legislator. These institutional rules combine to take reduce the
party’s ability to screen successfully by reducing the value of the incentives it can offer to loyal members.
The second factor is the opportunity cost of loyalty. Consider a system where legislators can vote
against their party with disciplinary impunity, change parties without losing their legislative seats and / or
with low electoral costs and can develop valuable expertise in an issue area through long tenures on the
committee governing its policies. In such a system, candidates have little incentive to follow the party line
if it proves to be an obstacle in their upward professional mobility. The opportunity cost of being loyal is
very high. Therefore, in a system with institutional rules which promote this behaviour parties will be
undermined and unable to control their own members. The institutional rules which would lead to this are
lax disciplinary rules for voting against parties on bills or in committees, lax rules for defecting and
changing parties as a legislator, long tenures on committees. If this institutional rule is embedded in a
political environment where voting decisions by voters are made on individual attributes, then there is even
less incentive to by loyal. These factors combine to reduce a party’s ability to design successful screening
contracts by taking away its ability to target rewards and penalties.
The third factor, share of effectively heterogeneous districts, is a characteristic of that country’s
electoral landscape and its electoral system. The definition of effective heterogeneity is a combination of
preference heterogeneity and the electoral rules. Districts will be composed of people with various
preferences on party ideology and on policy. . Some districts will have more preference variation than
others because voters differ more on the characteristics that drive their preferences, these are the more
heterogeneous districts. Candidates face higher obstacles in getting elected from these districts as they need
to attract a more diverse group of voters. This involves more expense for campaigning and potentially more
accommodation in their policy platforms. Electoral rules governing the number of members elected from a
district, the rules for translating votes into seats, rules on pooling and transferring votes across party
members within a party can magnify the basic diversity of voters in an electoral district. The larger the
district magnitude, proportionality of vote to seat translation, pooling and non-transferability, the more
competition the candidates face within their own districts both from candidates from their own parties and
from candidates from other parties. The combination of these two features of districts is what is called
effective heterogeneity. But this is not a critical problem for the party because it knows that any deviations
are due to the candidate’s self interest. The party can choose how much it values its coherence and set the
standard accordingly. In this case the only reason for a candidate to deviate is the desire to win by
accommodating the diversity of his constituents. Once he is elected to office, the candidate’s only
responsibilities are to his constituency. This changes when we introduce interest groups into the model.
14
Special interest groups provide valuable resources to their targets. These range from financial
support during the campaign period and between campaigns, to technical information and expertise during
legislative and committee careers, supporters for public demonstrations of support, free media opportunities
and the votes of its constituents. They will choose to direct these resources towards the most influential
policy actor they are able to access. This will depend on the kind of system they are in. In the party centred
system, since they find that parties are the ones to control policy and legislation and, they can effectively
penalize any members who go against them, lobbies will target parties.
In the individual centred system,
interest groups will find that parties are ineffective in delivering policies as they are unable to control their
members’ behavior and through it the legislative process. Individual members are able to introduce and
shepherd policy and bills according to their priorities with little retaliation from parties. Thus, in this
system, lobbies will target individual with attributes they consider desirable. This outcome is derived
endogenously as the outcome of the screening game. Here the heterogeneous districts play a critical role.
Now, all candidates will want to accept funding and resources from lobbies and improve their
electoral prospects during the campaign period itself. However this will require them to accommodate the
interests and positions of the interest groups. However, if they do so, they will betray their actions to the
party. Only disloyal candidates from heterogeneous districts will be able to deviate from party platforms
and yet mimic loyal types by pleading voter diversity as the cause. So only they will be able to bluff
effectively. Candidates from homogeneous districts will be identified as having accepted lobby funds
immediately and in a system where parties can separate successfully, they will never be promoted to good
positions. Now, the party’ task in designing successful contracts becomes harder due to this subterfuge by
the candidates from the heterogeneous districts. A higher share of effectively heterogeneous districts make
it harder for a party to screen loyal candidates successfully since the distribution of deviations will be
skewed towards higher values, all else equal. They now have three groups of members, loyals, disloyals and
members they are unable to classify with high deviations from heterogeneous districts. Now, the capacity
they are endowed with by the legislative system to design discerning contracts is what will enable them to
deal with this problem successfully, by creating separating contracts or unsuccessfully, thus creating a
pooling equilibrium.
In the world without lobbies, the party has first best information and can successfully classify all
members. Once the lobbies enter the picture, parties have to pay information rents even in a separating
equilibrium. Interest groups faced with a party that can separate its members, will realize the futility of
choosing individual members as advocates and will thus lobby parties. In a system where the party fails to
separate, they will find it more welfare enhancing to lobby individual candidates.
This model leads to the following hypotheses:
15
Dependent Variable: Lobbying target
•
H1: Lobbies lobby parties in party centred systems
•
H2: Lobbies lobby individuals in individual centred systems
Independent Variables: Institutional mechanisms driving choice
•
H3: Higher party control over access to the legislative process, higher the probability of a
party being lobbied
(Through procedures, introduction of bills, agenda setting)
•
H4: Higher party ability to control legislation, higher the probability of parties being
lobbied
(Control through amendments, debates, party ability to enforce committee behaviour)
•
H5: Higher party ability to penalize misbehaving members, higher the probability of
parties being lobbied
•
H6: Lower the opportunity costs of staying loyal, higher the probability of parties being
lobbied.
•
H7: Lower effective heterogeneity leads to higher party control, therefore, higher the
probability of parties being lobbied
•
H8: Lower party control over access to the legislative process, higher the probability of
individual politicians being lobbied
(Through procedures, introduction of bills, agenda setting)
•
H9: Lower party ability to control legislation, higher the probability of individual
politicians being lobbied
(Control through amendments, debates, party ability to enforce committee behaviour)
•
H10: Lower party ability to penalize misbehaving members, higher the probability of
politicians being lobbied
16
•
H11: Higher the opportunity costs of staying loyal, higher the probability of politicians
being lobbied
•
H12: Higher effective heterogeneity leads to lower party control, therefore, lower the
probability of parties being lobbied
•
H13: Venue choice of lobbying will be independent of the issue type.
Operationalization
The three key institutional factors that the model argues matter are as follows:
I.
Party Control: The degree to which parties control access to benefits from holding office
II.
Opportunity Cost: The opportunity cost of being loyal to one’s party i.e. lack or abundance of extraparty career opportunities
Effective Heterogeneity of Electoral Districts: Share of heterogeneous districts in a country stemming
III.
from the degree of heterogeneity of voter preferences and from the electoral system in that country.
Party Control: When parties are elected to office, they are able to participate in the legislative and policy work
of the nation to the degree that the constitution allows them to. Variations in institutional features give political parties
varying degrees of control over two key factors regarding rents. A) The share of rents that is controlled by them. B),
access to this share. E.g. A system maybe designed such that the party may be the only feasible channel through which all
forms of rents from holding office can be realized by party members. Or, the parties may have so little control over rents
that they are almost never the channel through which members can realize office rents.
Share of Rents
The first feature, that of share of rents from holding office, is determined by the following characteristics of the political
system – structure of procedural control over a) legislation, b) over scarce legislative resources and c) over extra
legislative perks. These features determine the baseline share of different victorious parties in the flow of government
business whether or not they form the government itself.
1. The structure of procedural control over legislation: is composed of control over proposal powers, agenda setting
power, procedural rights over the passage of bills including amendment rights, rights to designate bills and motions as
urgent, and the role of committees. These features determine the degree to which it is the party which has control
over the flow of legislation. The importance and salience given to committees in the legislative process determines
17
how valuable committee posts are to members. Similarly, the importance and share of other legislative posts such as
chamber presidents, vice presidents, speakers, etc. also provides a carrot to the party. Combined, these features
determine how valuable the party’s victory is.
2. Structure of control over scarce legislative resources: includes control over floor time for question and answers, and
urgent public motions, for allocating resources like secretarial staff and research resources. Access to floor time
during question and hour periods, times set aside for discussion on urgent matters of state or policy are a very
valuable resource for politicians as they are covered by the media. They allow members to be seen working for their
constituents. Other resources that can be scarce for legislators to get are secretarial staff for mundane things like
answering letters and phone calls which may be key to maintaining good relations with constituents as well as for
things like research into technical aspects of issues of political interest to a politician for a variety of reasons. This
scarcity can be compounded by low salaries which would not support individual staffs
3. Control over extra legislative resources: The rules for appointments to various extra legislative posts that a party has
at its discretion based on its seat share or coalition membership, can be a means to reward members both elected and
un-elected, for their loyalty to party causes. The larger the number of suitable government related posts outside
assembly, nominations to legislative chambers when there are party nominated legislative positions available, lower
the number of restrictions on the size of cabinets, etc. Higher is the capacity of a party to reward its members as the
value of rents under its control is higher. This capacity can be especially high in developing countries with large
public sector enterprises and high numbers of regulatory and approving agencies both can yield high number of
desirable and profitable appointments that are highly sought after by politicians.
Opportunity cost of loyalty captures the value of the next best option that is available to the
members. These opportunities need to be evaluated in terms of both the electoral and legislative
dividends they may yield. If the legislator is an environment where defectors need to start from the
bottom of the ranks and make their way up through party ranks in their new party, the cost of loyalty is
low because the alternative requires considerable investment. If however, it is easy to switch parties
and get high positions with patronage possibilities, the cost of staying loyal to one’s current party is
very high. Members will be more likely to switch in such a scenario, ceteris paribus. To operationalize
this parametrically, I look at defection rates in both countries, re-election rates from defectors and
number of defectors who get high posts in their new parties immediately.
To operationally these concepts in the empirical study, I asked lobbies various questions on
how much value they place on different legislative, administrative positions and powers within the
legislature and look at whether the party is able to control those positions tightly.
18
Heterogeneity refers to the effective heterogeneity. This is a combination of properties of the electoral
system and the voters. Electoral factors which make a system more heterogeneous are proportionality
rules, large district magnitudes and open lists (Carey and Sugar 1997 list). Voter characteristics which
create heterogeneity of preferences are those voter attributes which are considered to be important
determinants of their voting behaviour. Clearly, this is a simplification as this is an active research field.
I look at voter characteristics such as poverty rates, state level Gini indices, ethnic and religious
heterogeneity, percentage rural in each district, occupational sectors and literacy rates. These can be
divided roughly into social and economic sources of heterogeneity. This information is being used to
parameterize the two cases for this project.
Case logic
Our dependent variable here is whether lobbies target parties or individuals. This is an indicator variable. When
the system is party centred, the indicator says that interest groups lobby parties otherwise they lobby candidates. The
model identifies three functional characteristics of institutions as being the key drivers of the party-member relationship
and one preference type. These functional characteristics are our explanatory variables. There is a wide range of
institutional permutations which realize these functions; this gives us our full set of values on the explanatory variables.
To test this theory comprehensively, we would need to do a cross-country analysis which captures the choice of party or
individual targeted lobbying over the entire range of institutional realizations.
This would allow us to individually test the effect of each of these institutional parameters, determine the
threshold values for them which make systems switch from inspiring one behaviour pattern to another and test for their
relative importance in determining the cumulative behaviour of the political system. Thus, to test this theory, we would
need data which recorded the value of our dependent variable, party or individual targeted lobbying behaviour of special
interest groups, across the entire range of possible institutional arrangements for the dependent variable. For the
independent variables, we would need to run two distinct sets of regressions. One with the set of institutional
arrangements themselves coded as the independent variables driving the behaviour and two, with the functional behaviour
posited by the arrangements as the independent variables. To be robust, both these regressions must confirm the theory.
Unfortunately, this range of dependent variables is not available for any set of countries, most especially,
developing countries16. Most of the data capturing institutionally driven behaviours such as amendment introduction by
different political actors, roll call, expulsion and defection by members, etc is not widely available either. Therefore, the
strategy of doing a large cross country statistical analysis is just not feasible for this model. This suggests a strategy of
using a few well chosen cases. The choice should be dictated by cases which represent those realizations of these
functional characteristics that give us the clearest predictions. The strategy I adopted for this study was to pick two cases
where the electoral, legislative and voter preferences were all mutually reinforcing so that the theory made clear
19
predictions and to test those cases first. This was equivalent to parametrizing the relevant institutional characteristics and
then testing the validity of the theory for these two specific values of the parameters. The dependent variable here was the
choice of lobbying target. The independent variables were the identities of the institutional mechanisms driving this
choice of target by lobbies. Once the cases were selected, my plan was to collect the required data on the dependent
variable myself through a survey of various special interest groups in the selected countries. The data set thus gathered
would yield information on the choice of lobbying target for the dependent variable. For the independent variables, I
would gather information on the various institutional mechanisms that were used by lobbies, and on the incentives to use
these specific mechanisms. I could then test whether the institutional mechanisms used in each case were the ones
predicted by theory for that case, whether the reasons they were being used, were the incentives that were identified by the
theory and whether they were driving the choice of lobbying venue predicted by theory.
If the theory was rejected in the two clearest cases, then there was little hope for its validity in the more complex
intermediate cases which depend on net effects of institutions rather than mutually reinforcing effects to drive the choice
of target. If the theory is not rejected for these two cases, then it might merit the enormous investment in data gathering
that is required for further research. Given, the nature of the data needed to test the theory, data collection was going to be
a time intensive process so I was also constrained on the number of cases I could feasibly do well in the time frame
available to complete a doctoral thesis.
The key decision then becomes case selection. The theory makes predictions about three things – the pattern of
lobbying in different systems, the political consequence of the lobbying patterns in that system and the policy
consequences of lobbying patters in that system. I wanted to pick cases where I could test the predictions on all three
fronts. The logic I used was to select cases where the institutional arrangements of the electoral and legislative systems,
opportunity costs and voter preferences provided the clearest contrast on the explanatory variables side. This would allow
me to test to see if the dependent variable had the predicted values and, if this was for the right reasons i.e. through
significance of the appropriate explanatory variables. Another consideration was choosing from among developing
countries which experienced the sort of information asymmetries described in the model. These two criteria would ensure
a reliable test of the first two predictions.
Since I wanted to test the predictions of the model for policy as well, I wanted to pick cases which had
comparable economic histories so that the effect of differences in the political systems on policy-making process could be
as transparent as possible. However, to be considered robust, these predictions would have to be tested across a range of
policies on goods of different types and environments. This was aimed at addressing concerns about differences in
behaviours that might stem from differences in the characteristics of goods such as public vs. private goods, protected vs.
highly internationalized markets, highly politicized high profile issues vs. non-politicized low profile issues, technically
opaque vs. transparent issues, etc. So, I decided to pick a range of issues rather than a single issue. This involved
compromising the ability to go in depth into a single issue in favour of testing a limited number of behaviours across a
20
range of good types and characteristics. Since the thrust of this project at the current stage is to establish a theoretical
framework for understanding lobbying in a comparative context, the policy issues were picked with a view to enhancing
the ability to test claims of the theory, not with the view of exploring lobbying in great depth on the economic issues of
most interest to me. The issues I finally chose to cover in the survey are ones that are of great importance to reform
efforts in developing countries and are the subject of active academic research in political economy and international
political economy fields. They also include issues of great interest to me for research such as foreign exchange, financing,
trade and labour. The compromise involved giving up the chance of going into great depth for just foreign exchange and
labour in favour of including environment and taxes, goods with different characteristics, albeit at the cost of more limited
data.
The two cases I finally selected are Brazil and India. In this paper, I discuss only the venue choice of lobbies and
the mechanisms driving it. The electoral and legislative systems of Brazil and India are very different and provide clearly
contrasting realizations for the independent variables. These are discussed in detail below in Table 1. There are however
two important institutional similarities. Both countries have federal structures and, executives which dominate
legislation17. This allows us to control to some extent for the difference of presidential versus parliamentary
arrangements for executive-legislative arrangements. The federal structure allows us to control for similar structures in
centre-state relations. These are however crude controls as these similarities mask differences in both dimensions. These
countries differ greatly on the exact nature of their federal structures and in the impact of fused executive legislative. As
discussed earlier, in line with the recent body of literature, I rely on details on the legislative process to capture the degree
of differences on this dimension18. I restrict my attention to the distinction between identity of the controlling entity, party
or individual.
Table 1: Institutional Arrangements
Category / Rules
Brazil
% Legislation initiated by Executive
8619
India
ELECTORAL FACTORS
1. Share of Heterogeneous Districts
•
District Magnitude (Range)
8-70
•
1 - 2 (till 1967)
•
1 (post 1967)
•
District Magnitude (Level)
State
•
Rule for Vote Æ Seat translation
Proportional
Plurality
•
Open / Closed list
Open
--
17
Cite papers for both cases
18
District – sub-state
19
Total between 1989-1998. Neto and Santos 2003. The Inefficient Secret Revisited: The Legislative
Input and Output of Brazilian Deputies pp 451
21
•
1995
1999
1984
1994
Range of Income GINI
NE – 52%
NE- 50%
19.64 –
17.89 –
(States)/Poverty Rates
South - 17
South - 19
39.36
35.67
Cumulative Effect
2. Opportunity Costs
•
Constraints on Length of Party
•
1988 – None
None prior to elections
Affiliation for Electoral
•
1999 -- 6 months
Can only defect with 1/3 of
prior to elections
the party to keep legislative
Candidacy
seat
•
Individual responsibilities.
Campaign Cost Sharing
Arrangements Between Party and Candidates must turn over $
in accounts to party, post
Candidates
Party shares a substantial part
of the expenses. Candidate
allowed to retain accounts
election
Cumulative Effect
LEGISLATIVE FACTORS
1. Control Over Rent Allocation – Rewards & Penalties
•
Control of Committee
Party
Party
Nominations – Party
Nominations – Party
Votes - Floor
Vote - Floor
By government
By government and parties
Colegio – group of party
Speaker, with non-binding
leaders proportional to seat
consultation,
Nominations
•
•
Control of Chamber Nominations
Non-Elected Posts - # and
Nominations
•
Control Over Legislative Agenda
shares, by consensus
•
Introduction of Bills &
Colegio, Individuals
Speaker
Colegio
Speaker and party leaders
Amendments
•
Control Over Q & A
2. Control Over Disciplinary Mechanisms - Penalty
•
Recognition of Defections By
Party
Party asks Speaker to
recognize
Cumulative Effect
22
PRIMARY BASIS OF VOTING DECISION
Primary Actor Preferred
Individual20
Party21
First, control over access to legislative rent and to reward members: Brazilian and Indian rules on access to the
legislation processes are very different. In Brazil, procedural matters regarding the introduction of bills and amendments,
committee recommendations for bills, questions and answers, etc are agreed upon by the Colegio de Lideres, the College
of Leaders. This is a multi-party group with parties represented in proportion to their seat shares. This ensures that all
parties have some access to and some say in procedural and agenda setting decisions. Hence, if a member is not able to
get his party’s ear, he can always go through another party’s leadership to gain his ends. This weakens the monopoly of
access that a party can dangle in front of its members. In India, these decisions are made by the Speaker of Parliament in
consultation with party leaders. However, seat shares play is not formalized and therefore, the Speaker who owes his
position to his party, controls the agenda.
In theory, the entire floor elects an eminent parliamentarian of great integrity
who is above partisan considerations. This is the Westminster tradition where Speakers resign their seats on assuming
this position. In India, this is not the case. This position has always been a very partisan choice dictated by the party or
coalition with the largest support in the lower chamber22. Therefore, the procedural flow of legislation on the floor and
through committees, recognition of members for introducing bills, for urgent and zero hour questions, are all at the
discretion of the leadership of the party controlling this chamber. Parties not in the ruling coalition have no formal say in
the flow of legislative business. Any consultations are conducted at the level of party leaders and rank and file members
have no say in these consultations. Individual members must go through party leaders to gain any personal considerations
on policy or legislation.
While members in both countries can introduce private bills, the procedures they need to undergo, are
substantially different. The result is that individual members in Brazil formally and practically have the individual
capacity to introduce bills that they are interested in sponsoring with or without the support of their party. This allows
them to negotiate with the executive at any stage of the policy process whether or not the executive is controlled by their
party. In India, this is not formally or practically feasible. One has to have the support of one’s party to access the
executive, to sponsor bills and amendments and, to be given a share of time on the floor through the party time slot.
Legislative evidence from these two countries clearly demonstrates these institutional constraints. Table 2 presents some
data that show the extent to which the party controls the flow of legislation in India and to which individual congressman
can access it in Brazil. Neto and Santos 2003 analyze bill introduction and passage in the Brazilian House and find that
there is a linear relationship between party seat shares and candidate share of legislation introduced. They argue that this
shows that the ability of a candidate to introduce legislation is independent of his party affiliation otherwise the bigger
20
IBOPE , Ames
CSDS NES Surveys 1967, 2004
22
Mitra
21
23
parties would have dominated legislation while the smaller ones would have been locked out. In contrast in India, it is
clear from this Table 2 that no legislator in India can legislate outside of his party’s agenda. This reality is so extreme
that the last private bill to be passed in the Indian Parliament was in 197023!
Table 2: Institutional Behavior
Category / Rules
Brazil
India
ELECTORAL FACTORS
1. Share of Heterogeneous Districts
Party Heterogeneity
1994
•
Average # of Parties
•
Average # of Candidates /seat,
1998
2002
1996
1999
2004
38
47
57
22.84
District
•
25.
8.5
69
6
1
Average # of Intra-Party C/D
1
10
1
Voter Heterogeneity
•
Range of Income GINI
52% in NE
50% in NE
1984
1994
(States)/poverty rates
17% in
19 % In
19.64-39.36
17.89-35.69
S(1995)
South
(1999)
Cumulative Effect
OPPORTUNITY COSTS
1994
•
% Winning Candidate
•
% Winners From Party Changing
52.8
1998
2002
1996
1999
2004
3.89
11.68
9.99
1996
1999
2004
60.4
Candidates24
LEGISLATIVE FACTORS
1. Control Over Rent Allocation – Rewards & Penalties
199325
23
1998
2000
Legislative handbook
Samuels, Legislative Turnover in Brazil , LSQ Aug 2000, Vol xxxv,3, p491
25
% of approved amendments by MC = 0 and % amend intro was 99.8. Was this Collor’s year? Using 93 to
take a more typical year
24
24
•
Overlap between Committee
Membership & Political Elite
•
% Bills Introduced by Party
•
% Bills Introduced by
269/??
26
Individuals
•
% Individual Bills Passed
•
% Amendments Introduced by
0.0
0.0
0.0
64.0
27.8
35.2
71.0
33.5
44.7
1994
1998
2002
1996
1999
2004
2002
1994
1998
2002
Parties
•
% Amendments Introduced by
Individuals
•
% Individual Amendments
Passed
•
Probability of getting a
ministerial post
•
Non-Elected Posts - #
2. Control Over Disciplinary Mechanisms - Penalty
•
% Legislators Defected27
41.0
27.0
•
% Legislators Expelled28
1.6
0.0
•
#/% Automatically Disciplined
1994
1998
40
37.2
3. Opportunity Costs
•
•
% Legislators Voluntarily Taking
Leave & Quitting Legislature For
Other Positions29
•
% Changers Not Given New
Positions In Legislature
Cumulative Effect
PRIMARY BASIS OF VOTING DECISION
Primary Actor Preferred
26
Individual30
Party31
269 is total number of bills introduced by individuals out of ????.
Samuels, LSQ Aug 2000, 3 , pp 491, The Numbers are averages from 1991-94, 1995-98
28
Samuels LSQ pp 486
29
Samuels, 2003, ambition book pp51, total over 91-94 term, 95-98 term + 20% average quit permanently
to take up state and municipal positions after winning
30
IBOPE , Ames
25
27
The ability to penalize members: Both countries suffered from outbreaks of defections. Table 2 presents the
figures for both countries. In 1994, in an effort to stem this tide, the rules were changed to address both pre and post
electoral defections. While this has had some impact on the frequency with which members cross the floor, it has not
increased the ability to penalize members should they choose to defect once in office. Given voters do not vote on the
basis of parties, the opportunity cost of loyalty it just too high for an ambitious legislator32. Hence, the ability of parties
to penalize through disciplinary actions in the legislator or through expulsion from the party of misbehaving members is
still low.
In India en masse defections first happened in the 1960s when the Congress party failed to win enough support
to form state governments in __ states33. Lack of norms on valuing party loyalty by the biggest victim of this behaviour,
the Congress party, helped to establish this tradition for some time thus increasing the opportunity cost of staying loyal to
any given party. In 1987, the anti-defection law was passed giving the party the right to demand the expulsion of a
legislator if he defected individually from his party once in office. However, it was the prerogative of the offended party
to ask the Speaker to recognize the defection and mete out the legislated penalties. This had two consequences. One, it
gave parties another powerful tool to discipline members when they chose to. Two, it increased tremendously the impact
of party control over the position of Speaker. While the effectiveness of the law in stemming the phenomenon of
defections was constrained by the norms within parties on loyalty, it did strengthen the hands of parties by providing them
with a tool to penalize recalcitrant members. This tool was used unfortunately in rather creative ways by parties to control
their members. E.g. Since the party could choose not to ask the Speaker to expel a member who had already announced a
change of party affiliations and actively campaigned for their new parties, they used the threat of doing so to force such
members to vote with the old party, against the interests of the new, in order to keep their seats34! Therefore, the two
systems provide a vivid contrast in the capacities they give parties to discipline misbehaving elected members.
Opportunity costs of being loyal to one’s party is determined by a variety of factors – impact on electoral
chances, institutional rules on penalties for defections, internal party norms on accepting defecting members into their
fold and on the career paths of candidates. In Brazil, significant numbers, up to 40%, of national legislators either take
leave of absence from their legislative positions to take up state and local level executive positions, or voluntarily resign
their seats to do so35. In Table 2, when one compares the value of voluntary renouncements or leaves from the legislature,
40%, with the share expelled by the party, 1.5 %, the lack of teeth that the defection mechanisms provides becomes
patently clear. Opportunity costs are neutralizing the effect of any anti-defection incentives. The low value members
place on national level legislative positions in turn lowers the impact that the party leadership can have on their upward
mobility. This is reinforced by the tendency of Brazilian voters to cast their votes on the basis of the candidate’s identity
31
CSDS NES Surveys 1967, 2004
Ames
33
Frankel, wolpert, etc
34
Mitra
35
Samuels Ambition book
32
26
rather than on the basis of his party affiliation for national and state positions. In India, members want to move up the
ladder to central legislative positions rather than state level positions. This is tied directly to differences in the resources
that the federal structures place at the disposal of the executive at different levels of government. The result is that
members are dependent on the party for the chance to move up to the central level. This is reinforced by the fact that
voters in India cast their votes at the national level on the identity of the candidate’s party affiliation.
The effective heterogeneity of voters in the two countries is different. Brazil, as one of the most unequal
countries in the world, has tremendous economic diversity across and within states. Racial preferences are active in
regions only in regions which have high concentrations of a single racial group36. Religious and linguistic preferences
tend not to be active cleavages37. Thus, the economic diversity in terms of income and occupation is the most important
source of diverse preferences. However, electoral rules in Brazil magnify these differences. Brazil has multi-member
state level districts with open list proportional vote to seat translation, pooling and non-transferability. Thus, members
have to compete against each other to attract voters in order to gain enough votes to position themselves high enough on
the party list. Thus, candidates from the same party list need to differentiate themselves to the voter. This lowers the
electoral value of the party label for the candidate.38 The channels open to individual legislators to initiate legislation,
distinguish themselves in committees and on the floor are different. In Brazil, these factors combine to increase the
barriers that face individual members as he tries to get elected from a district. Thus, the effective heterogeneity he faces is
much higher than that indicated by the diversity of voter preferences alone. India, however, is very diverse in terms of its
electorate. Cleavages on caste, religion, language and region are all active election issues. Economic diversity on both
income and occupation are in addition to this. India has single member districts which coincide with sub-state districts
and are therefore much smaller and self-contained. Once a member has the nomination of his party, to the extent that
voters value its label, he alone reaps its benefits. The key here is that the degree of heterogeneity that is relevant is that
left after the party has accommodated diverse preferences itself in order to articulate a winning platform. In Brazil, the
party itself has to optimize along fewer cleavages but the candidates running on its ticket must then compete with the
other candidates from his own party thus raising the degree of heterogeneity he faces.
The non-institutional factor that the theory says drives interest group behaviour is the importance of the party
identity in the voting decision of individual voters. Voters in Brazil cast votes on the basis of the identity of the candidate
on the list, not his party affiliation39. Voters in India cast their votes based on the party that the candidate from their
district is affiliated with; individual attributes play a very minimal role in this decision40. This is supported by data from
public opinion surveys in both countries. Data from the National Election Surveys of voters from the Centre for The
Study of Developing Societies in New Delhi show that from 1967 through 2004, voters identify the primary basis of their
36
Ford Foundation Study
Ford Foundation Studies, Ames 2001
38
Ames cite in Samuels intro book
39
Cite IBOPE data
40
Cite CSDS NES Surveys
37
27
voting decision to be the party affiliation of a candidate. The second ranked reason is interest group identification – caste.
Individual attributes of candidates rank last. For Brazil studies show the exact opposite, public opinion surveys from
IBOPE, a polling agency in Brazil indicates that it is the individual candidate’s attributes that play the dominant role in
voting there, with the effect being muted for supporters of the left parties including PT (up to elections 2002)41.
Therefore, as Table 3 below summarizes, our cases provide us with the contrasting values for our parameters that
we wanted to test on.
Table 3: Summary of Parameters
Parameters
Brazil
India
ELECTORAL FACTORS
1. Share of Heterogeneous Districts
•
Institutional
-- High
-- Low
•
Voter
-- Low
-- High
Low
High
1. Control Over Rent Allocation – Rewards & Penalties
Low
High
2. Control Over Disciplinary Mechanisms - Penalty
Low
High
3. Opportunity Costs
Low
High
2. Opportunity Costs Of Loyalty
LEGISLATIVE FACTORS
PRIMARY BASIS OF VOTING DECISION
1. Actor Preferred By Voter
Candidate
Party
Individua
Party
NET BEHAVIOR
System Type
l
Two studies which look at the relationship from the individual congressional member’s point of view are surveys
by Hagopian in 2004 for Brazil and A. Suryaprakash in 1995 in India. They both survey individual members of
the assemblies in these two countries and among other things ask questions about the role and value of party
affiliation in their careers and their interaction with lobbies from business and non-business sectors. In Brazil,
Hagopian finds that party labels do not play a big role in the careers of rank and file members as perceived by
them42. Thus, they do not take policy positions in their districts to please parties but rather to please their voters
directly. In fact, when faced with tradeoffs between the two, they favour their district’s interests.
41
42
IBOPE SURVEY DETAILS Wave numbers?
Hagopian Workshop Paper 2004, Table # ??
28
This is the opposite of Suryaprakash’s findings from Indian parliamentarians. He finds that party agendas play
the defining role in establishing any positions that they take. Party labels are seen to be very important to careers and
voters. Individual MPs must access legislative resources through the Party leaders. They also claim that parties are the
only actors to pay attention to legislative records of MPs, voters do not track them. They form their opinions of MPs
through personal patronage which is facilitated and enabled through party leaders. Thus, from the member’s point of
view, these two interview based studies find contrasting patterns of behaviour which support the theoretical selection of
cases. They add another dimension to case selection.
The second reason for this case selection is the similarity of economic ideological history on policies of interest to
current research in political economy. The survey project was designed to take advantage of this common ideological
economic history to explore the differences in economic policies that are concerns for business interest groups today.
Since similar economic policies were adopted at similar times, we can compare the impact of political systems on the
design and implementation of these policies more effectively for this set of countries. The policies for which lobbying
was studied in these two countries via the survey were foreign exchange, taxes, financing, trade, labour and environment.
This choice allows us to test some subsidiary hypotheses about the relative importance of different sources of influence
for lobbies, the nature of their access, their interaction with the political establishment generally, their political knowledge
of the system, and the factors that govern the choice of tools that interest groups adopt to get influence. These policies
were also chosen because they embody a range of values on issue characteristics which are thought to influence the mode
of lobbying such as level of organization of sector interests (share of sector organized, number of focal positions, funding
levels, etc), public profile of the issue (high vs. low profile e.g. labour vs. foreign exchange), nature of the issue (universal
public good vs. local public good vs. private good, vs. environment vs. trade ), degree of internationalization of sector
market, importance to businesses of different scales, technical sophistication required, etc.
Data and Empirical Testing
I. Empirical Design Lobbying Target And Political Consequence
The prediction is of Brazil being individual centred and India of being party centred. To test this prediction, I
needed to collect data on the dependent variable myself via a survey. The data for independent variables was also
gathered via the survey. This was done to gather information to test if the institutional rules and behaviours which the
model predicts are important are in fact the ones which influence the choice of the interest groups. This information is
also currently not available in sufficient detail for any country.
The data which is unique to this project is the survey data that was collected. The surveys were first pre-tested in
spring 2004 in Brazil and India and then collected over summer and fall of 2005 in Brazil and India. These surveys have
29
been conducted at the organizational level. The mix of organizations targeted was 70% business chambers (10% firms),
20% labour unions and 10% social and environmental groups. The sample was chosen by regional stratification on the
basis of regional GDP shares. I then picked the biggest commercial city of the region thus clustering within each region
and then randomly sampled organizations within the business, union and social categories. During the pre-test phase I
tried to maintain sectoral shares between agriculture, industry and services (i.e. the primary, secondary and tertiary
sectors) within each region. However, the high non-response rate made this strategy infeasible. The geographic sampling
details are given in Appendix 1 and the survey methodology is detailed in appendix 2.
The decision to target business organizations primarily was driven by three considerations. One, I wanted to
obtain the full spectrum of behaviour from actors with different preferences on a common set of issues. This meant that I
had to define a common set of issues on which a large set of actors with varying characteristics would potentially have
formed preferences.
Two, since I am interested in political economy, I was more interested in researching behaviours on
economic policy issues. Three, since I am testing a theory of special interest groups, not just business interest groups, I
wanted to pick issues on which the non-business, non-economic sectors had also organized. This would allow me to look
at how special interest groups generally, not just business groups, lobbied. Clearly, however, most business groups would
have evolved preferences and lobbying practices on these issues while only the affected non-business sectors would have
organized on some of the specific issues. This goes directly to Olson’s arguments about the costs and benefits of
organizing as the basis of collective action43. Business groups tend to have higher stakes in these issues than most social
organizations. Social organizations generally form to lobby for issues of primary concern to them such as religion, caste,
ethnic identity, homelessness, education, etc. Therefore, it seemed logical to sample more business groups than social
groups for these specific issues. These three considerations seemed to be served logically by selecting a range of
economic issues on which most economic sectors would have preferences but for which non-business interest groups
would also have strong preferences.
However, I wanted to check the validity of assuming that the behaviour of business interest groups would be
representative of the behaviour of special interest groups generally in that country. So, I drew a third of the sample from
non-business interest groups. This strategy allowed me to do this check and confirm that in fact studying the lobbying
behaviour of business interest groups was representative of general interest group behaviour in that system. This is of
special concern since business groups can be the most organized, though not necessarily the most influential, interest
groups in most developing countries for a variety of reasons. I also allowed the non-business groups to pick the issues that
were most important to them and did not constrain them to just choosing between the six issues I had listed. However,
given the nature of the issues raised in the survey and the dominance of business, the findings of the study are definitely
skewed towards economic issues and the behaviour of economically motivated special interests. This is a limit that my
operationalization of the project places on testing the wider applicability of the theory.
Testing the hypotheses of the
theory across non-economic interest groups on social, ethnic and religious issues robustly requires data that I do not have.
43
Olson logic of collective action
30
Hence, I do not claim that the theoretical framework discussed here is empirically verified for all special interest groups
and all policies.
To address the question of the validity of using formally organized interest groups to study interest group
behaviour generally and to address the concern that lobbying might be done primarily by firms rather than associations in
these countries, I looked at some cross country data the World Bank Business Environment Study collected on
membership in associations and success of these chambers in lobbying for issues. This was a 128 country survey of firms.
For India and Brazil there were about 200 firms in the sample for each country. As the figures 1-4 below show, firms
perceived lobbying to be important to their success and invested time in it and, they considered associations to be
effective lobbyists.
Figure 1: Time Spent Lobbying By Firms in India
Fraction
.347561
0
2
3
4
t_smgt
5
6
31
Figure 2: Time Spent Lobbying By Firms in Brazil
Fraction
.365079
0
1
2
3
4
5
6
t_smgt
Figure 3: Effectiveness of Associations and Chambers in Lobbying In India
Fraction
.465347
0
1
2
3
4
5
6
gvoc_ch
32
Figure 4: Effectiveness of Associations and Chambers in Lobbying In Brazil
Fraction
.335
0
1
2
3
4
5
6
gvoc_ch
Dependent Variable: The survey captures the choice of lobbying target in three different ways. One, by asking interest
groups directly whether they target parties or individuals for lobbying. This yields a binary value of 0 or 1. Two, by
asking them how they allocate their campaign resources across these actors. This yields a real value between 0 and 100%.
Three, by asking them how they allocate their lobbying effort between these different actors. This yields a real value
bounded by 0 and 100.
It also asks them why they choose to lobby a certain actor. The exact questions for all the
dependent, independent and control variables are listed in Appendix 3 of this paper and can be read off the survey itself
which is also attached.
I
Dependent Variable:
Construct: Y = Lobbying target -- political parties or individual legislators?
¾ 3 Measures
1.
When your sector wants to influence legislation when it is being designed and passed through
congress, who do you prefer to approach to lobby for your sector’s position?
„ with and without control for whether they prefer to lobby executive or
legislature
Political Party Parties
Y= 0
Individual Legislators
Æ Individual legislators
33
1
Æ Political Parties
2. Indicate the % allocations of the political contributions made by your sector along the following
categories: year ____
% between
%
% Between
%
A
% Between
B
%
% Between
C
%
Between
D
%
E
Government
Election campaign
Party
National
Executive
Opposition
Legislative term
Individuals
State
Legislative
Y = C % to party, %. Individuals
With and without control by E= % to executive (vs. Legislative)
3. Consider the lobbying experience of your sector. What % of lobbying effort went into lobbying the
following:
Executive office
______ %
Political parties
______ %
Individual legislators
______ %
Y = % lobbying effort devoted to party / % devoted to individual,
Independent Variables: They can be classified under the following categories – ideology of actor, party ability to
control electoral career of members, party ability to control legislative career of members and opportunity cost of party
loyalty. Ideology considered factors such as general and sector specific ideological compatibility of lobby with the party
and with the individual candidate and, ideological loyalty of the candidate to the party and its policy. Party ability to
control legislative career of individual candidates captures the importance of control over specific stages of legislation.
The independent variables from this section capture the importance of party control over the stages of legislation from
drafting, procedural decisions, debate and reporting in committee, discussion and amendments in committee and floor
and, voting on the floor. Another set looks at the importance of the ability of parties to reward and penalize members
through award and withdrawals of committee appointments, disciplinary actions in legislature, expulsion from party and,
award or withdrawal of bill support. These variables capture the influence of the various institutional rules indicated by
the model in determining the choice of target of interest groups. The importance of party ability to control electoral
carrots is also tested through variables such as the importance of party control over nominations, campaign funding, and
voter preferences. The impact of district heterogeneity and electoral uncertainty on venue choice is also tested.
They are listed in Appendix 4 by category. There are three ways in which I propose to use these variables to
create explanatory variables which capture the key institutional features for our argument:
34
•
Creating weighted indices of party control over all influential legislative process stages: I combine information
from two sources on the survey. One, I ask groups how important the different stages of legislation are to them.
Two, I ask them to assess how important party control over these stages are to their choice of venue. I then
combine these two measure to create five measures which weigh the importance of party control over each
legislative stage by its importance in that system. This gives us a weighted measure of party control. The scale
is from 1-5 with 1 indicating no influence and control.
•
Creating a weighted index of party relevance over the three most important legislative stages: I combine
information from two sources in the survey. One, I ask groups which three stages of legislation are most
important to them. Two, I ask them to rank the most influential actors at each stage and classify whether that
actor is party leadership or individual member. I then combine these to get measure for party control over the
stages considered the most important for legislation. This measure also goes from 1-5 in a similar manner.
•
Using conceptual measure directly: Using measures that directly capture the concepts articulated –ideology,
electoral control by party, influence with executive in and out of power, committee control and ability to expel
members from important posts and party. These are taken directly from the questions in the survey as listed in
Appendix 4.
Control Variables: The survey also solicits data on variables such as strength of interest group in terms of size of
industry in terms of output and workers, coverage of members, importance of sector in the economy, geographic
concentration, concentration of output in sector, scale distribution of firms, public ownership and control by government,
international exposure, and number of organizations representing that sector. These variables allow us to control for the
kind of sector characteristics that proponents of the economic factors primarily drive business-government relations view
argue are critical while we focus on the impact of political factors. Their relative importance allows us to test this
argument explicitly by comparing behavior across different issues for the two countries for a variety of sectors. There are
also questions which allow us to control for the economic and political bias of the interviewee personally and from the
sector’s point of view. These variables are all listed by category in Appendix 3 of this paper. The data on institutional
behaviour is taken from various government sources in Brazil and India including their Congressional websites. The
electoral data is mostly from the elections commissions from the two countries. The data on literacy, occupation, religion,
caste and urbanization rates for voter heterogeneity is taken from the Census surveys conducted in both countries in 2001.
35
Empirical Results
The basic regression being estimated in this model is as follows:
Model 1 - For weighted measure for all 5 stages:
y (Lobby Target) = β0 + β1. Weighted party control over drafting + β2. weighted party control over procedure +
β3. Weighted party control over committee debates + β4. weighted party control over
amendments + β5. Weighted party control over voting + Personal Legislative Attributes
+ controls
Coefficients should be significant and positive for the choice of parties.
Model 2 - For weighted measure for top 3 stages:
y (Lobby Target) = β0 + β1. Party control over rank1 stage+ β2. Party control over rank 2 stage +
β3.Party control over rank 3 stage + Controls
Coefficients should be positive and significant to indicate party choice on dependent variable.
Model 3 - For Direct Conceptual Measures:
y (Lobby Target) = β0 + β1. Party share of rents + β2. Party ability to target rent + β3.Electoral opportunity
cost of loyalty + β4. legislative opportunity cost of loyalty + β5. Personal Attributes
+ controls
Expected Signs for the Concepts For Model 3
β2
β1
Party share of rents Party ability to
Actor
target rent
β3
β4
β5
Electoral opportunit Legislative opportu Personal Attributes
cost of loyalty
cost of loyalty
Party
+
+
-
-
-
Individual
-
-
+
+
+
As discussed in the data section, these concepts have been articulated using different operationalizations.
Therefore, the estimations can check for the importance of specific institutional mechanisms within each category
of explanatory variables. Ideology is articulated within the opportunity cost categories. The two types of models
36
used are Probit, for the binary realization of lobby target and Least Squares for the realization for continuous
percentage efforts operationalization of the dependent variable.
Table 4 reports the percentage of interest groups for India and Brazil which choose Party as their
lobby choice. We can clearly see that as expected the overwhelming majority of lobbies in Brazil do not
choose parties and in India they do. To test the theoretical framework for the mechanisms, we estimate a
probit model for equation (1).
Table 4: % Respondents Indicating Choice of Lobbying Target
Brazil
India
(n= 54 )
Party
Individuals
(n=
No
Party
Individuals
Response
Y1
6
48
-
52 )
No
Response
44
8
-
Tables A and B contain frequency based information which allows us to assess whether the key
characteristics of party control – ability to target its share of rent through various institutional features and
the opportunity costs of loyalty to party through value placed on institutional processes and positions, are in
fact important in giving a party control over its members careers. This allows us to draw preliminary
conclusions about the impact of interest groups on the party-member relationships as filtered through the
various institutional design features of these two countries. The trends seem broadly consistent with the
predictions.
37
TABLE A
Characteristics of Party Number of People who
Brazil
India
consider the factor to be of at (n= 54)
1
Ideological Opportunity
(n= 52)
least average importance
Lobbied Lobbied Lobbied Lobbied
i.e. score >3
Party(6) Indiv.(48 Party(44) Indiv.(8)
Party ideology
6
15
16
0
Party control over procedure
6
27
36
0
Party control over committee
3
15
28
4
Cost
2
Ability to target rent and
rent share
3
Ability to target
and legislative appointments
4
Ability to target
Able to expel from committees 6
18
4
4
5
Opportunity
Able to expel from party
6
15
8
0
Influence over bill drafting
3
36
24
8
cost/penalizing
6
Control over rent
allocations
7
“
Influence over bill procedures
3
42
20
4
8
“
Influence over amendments
3
45
24
4
9
“
Influence over debates
3
45
24
4
10
“
Influence over voting
6
42
32
0
11
Opportunity cost both elec Personal prestige of members
3
42
12
8
Legislative opportunity
Value of penalties for changing 0
18
36
0
cost
parties
and legislative/personal
attr.
12
13
Ideology/personal attribute Individual ideology
3
33
4
8
14
Legislative opportunity
Able to promote to exec.
0
27
36
0
cost
positions
Legislative opportunity
Able to expel members who
0
12
36
0
cost
vote against party
Electoral /L. Opportunity
Party re-election w/control of 6
15
12
0
cost
executive
Electoral/L. opportunity
Party re-election w/control of
12
12
0
cost
legislature
15
16
17
6
38
Table B
Characteristics
% scoring it at least averagely
India % scoring it at least
important
averagely important
Score > 3
Score > 3
Brazil
1
Frequency of legis. contact
at least every few months
61
at least every few months
93
2
Frequency of exe contact
at least every few months
70
at least every few months
93
3
Frequency of party contact
at least every few months
48
at least every few months
33
4
Actor ranked most important
Government party leaders
51
executive
72
5
Stage ranked as most import
Procedural stage
46
drafting
50
6
Stage ranked 2nd most import Amendment stage
31
Debates in committee
57
rd
7
Stage ranked 3 most import. Floor voting stage
47
Debates and amd. on floor
47
8
Preferred lobbying venue
executive
85
executive
61
9
Actual lobbying venue
party
87
individual
89
10
Importance of party popularity
47
11
Single most important factor in Party ideology/party economic
30
Individual ideology
24
17
lobbying venue choice
platform
12
Single most important policy
trade
34
taxes
34
13.
Most useful lobbying tool
Technical information
39
information
56
14.
Lobbying effort success
Average or very successful
42
Average or very successful
75
15
Share of lobbies collecting
23
71
voting records
To test the hypotheses that it is the economic issue that determines the mode and venue of lobbying,
we can test for differences in the lobbying strategies across the different issues. Summary statistics from the
surveys, pooled across both countries, show that in fact this is not the case. The strategies chosen are
invariant to the specific issue being considered. We can also confirm that strategies do not depend on the
sector either as the summary statistics show that the venues chosen do not exhibit any systematic pattern
with the nature of the sector.
One trend which is observable in both countries is that groups that are state level, tend to go to
individuals in both countries. This choice is not influenced by characteristics about the individual other than
his general competence and his influence with the executive when his party is in power.
39
Table 5: Results for y1: Who do you prefer to lobby? Probit Model Y =1 indicates Party
Brazil
India
Brazil
India
Brazil
India
Brazil
India
Constant
Category
Ideology
Individual
Party
Rents
Ability to
reward
Ability to
penalize
Share
Opportunity Electoral
Cost
Legislative
Personal
Personal
Attributes
Prestige
Competence
Other SIGs
Influence
with exec
w/o party in
power
Table 6: Results for y2:
Table 7: Results for y3:
Table 8: Hypotheses Testing Results
Subject of Hypothesis
Brazil
India
40
y1
y2
y3
y1
y2
y3
H1
H2
H3
H4
H5
H6
H7
H8
H9
H10
H11
Table 9: Results for Testing Issue Specific Lobbying Targets only for y1
Taxes
n=
Financing
Foreign
Trade
Labour
Environment
Exchange
Brazil India Brazil India Brazil India Brazil India Brazil India Brazil India
Const
% prefer exec
Agriculture
Manufacturing
Services
Construction
Utilities
Commerce
Intl Exposure
Concentration
Size
Top 5 Ratio
% Organized
41
Hagopian 2004, also shows that in Brazil, lobbies do in fact command substantial time and resource
commitments from legislators. She also reports on factors which drive the party-member relationship. In terms of
frequency of contact, contributions of funds, information, public support, etc lobbies play an important part in the
individual decisions and career of members completely outside the purview of the party and are rarely assessed
with party ramifications in mind other than increased personal prestige. Suryaprakash finds in India, these
interactions are either directed by the party or are filtered through the lens of ramifications for party and for
personal standing within the current party. Thus, there is support for this theory not just from data based on the
perspective of interest groups but also from the perspective of party roles by individual politicians.
Conclusion and Future Research
This project had three goals. One, to anticipate and explain the variation in lobbying patterns across different
institutional arrangements and link them to their institutional sources. Two, to understand the political consequences of
this variation especially on the key relationship between political parties and their individual members. Three, to
understand the policy consequences of this variation. The project provides a theoretical framework with which to address
these questions. It discusses and adopts a case study approach to test the validity of this theoretical framework. The
predictions are tested, using survey data, for a well defined application – business interest groups in two developing
countries, Brazil and India. These results are contrasted with the case of lobbying in China to study the contrast with a
non-democratic system with a purely institutionally derived party-membership relationship. China is analyzed
qualitatively based on interviews that were conducted with various interest groups there.
We find that the data support the theoretical assertion that in party centred systems such as India, lobbies make
parties, not individual politicians, the target of their lobbying strategies. This creates stronger parties and policy that is
relatively less led by interest groups. In individual centred systems such as Brazil, lobbies target individual candidates
with the exact choice of candidate being a function of personal attributes. The authority of parties over members is further
undermined by the behaviour of interest groups. Policy is relatively highly influenced by interest groups. Thus, we see
that there are institutional reasons for the variety of lobbying behaviour that is observed and that differences in these
patterns have ramifications for the nature of the political system and the nature of policy making within that system. This
project helps us understand why people can have such diverse opinions about the benefits and costs of lobbying and such
radically different prescriptions for their future. It also gives us insight into the costs that information asymmetries
impose on a political system by modifying the functional behaviour of its institutions.
Future research will focus on four aspects of this project. One, endogenizing the party –candidate basis of voting
preferences of voters into the current framework. This may require creating a dynamic model in a repeated game
42
framework. Two, modelling the venue choice for the legislative stage explicitly. Three, modifying or extending the
framework to integrate the role that bureaucrats play in environments where they are important actors in policy
implementation. Four, studying the impact of different cognitive biases and paths of different actors. There is a crucial
factor which is missing from this model and that is the relevance of the urban – rural divide. Most developing countries
are still pre-dominantly rural. The penetration of global economic forces into these bastions of traditional commerce is
very varied. Therefore, the opportunity to learn and adapt to a political environment where their place in the sun is
changing, is also very varied. Are globally exposed rural populations able to learn and adapt in welfare improving ways
compared to less exposed populations? What are the informational fallouts of globalization? These are some of the
questions I may pursue in future work.
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Appendix 1
Table : Geographic Distribution Of Interviews
Total #
Expected
BRAZIL
Total #
Expected
24
Brasilia (Centre West)
18
Mumbai (West)
66
Rio de Janeiro (Southeast)
20
Calcutta (East)
25
Belo Horizonte (Southeast)
15
Chennai (South)
25
Sao Paolo (Southeast)
70
Bangalore (South)
25
Salvador (Northeast)
15
Curitiba (South)
25
Porto Alegre (South)
25
INDIA
Ahmedabad (West)
New Delhi (North)
65
47
230
Total
188
Table : Range of Characteristics On Issues
Issue
Exposure to
Technical
Internationalization
public opinion
Expertise Reqd.
1. Financing
Low
High
Medium
2. Foreign Exchange
Low
High
Medium
3. Trade
Medium
Low
High
4. Labour
High
Low
Low
5. Environment
Medium
Medium
High
6. Taxes
High
Medium
Low
Appendix 2: Survey Methodology Description
For Survey
For Interviews
Year
2005
2004, 2005
Target Population
¾
Business Interest Groups
¾
Business Interest Groups
¾
Firms
¾
Social Interest Groups
¾
Social Interest Groups
¾
Environmental Interest Groups
¾
Environmental Interest Groups
¾
Party Officials
¾
Experts (academics, journalists,
retired bureaucrats)
Sampling Population
Sampling Frame
¾
Business Interest Groups
¾
Business Interest Groups
¾
Firms
¾
Social Interest Groups
¾
Social Interest Groups
¾
Environmental Interest Groups
¾
Environmental Interest Groups
¾
Association lists compiled from multiple
¾
Prominence and experience in
sources
¾
politics
Labour union lists compiled from
¾
Experience in party organizations
multiple lists
¾
Association lists
¾
Prominence in published research
48
(scholars)
¾
Prominence in media specific to
topic (for journalists)
¾
Relevance and prominence in
bureaucracy (bureaucrats)
¾
¾
Sample Design
Recommendations by others
Multi-stage stratified, clustered, random
sampling
¾
Stratification – by region
¾
Clustering – by primary business city
within region
¾
Random Sampling within cities
Sample Size
India – 230
Brazil - 188
Use of Interviewer
Yes ( # = 10 each )
No
Mode of Administration
Paper, Face to face
FTF, Phone
Computer Assistance
No
No
Time Dimension
Jul- October, 2005
Dec-Feb, 2004, July-Sep, 2005
Frequency
Annual, non-repeating
2
Interview Round #
1
2
Levels of Observation
Association
Web Link
Yes
Reporting Unit
http://pantheon.yale.edu/~vy5/
No
Appendix 3
¾ Ideology:
How important were the following in your choice of lobbying target, Scale 1-5
1.
Party’s overall ideology
2.
Party’s platform on the economy
3.
Ideology of individual legislator
4.
Ideological commitment of legislator to party policy platform
5.
Ideological commitment of legislator to party ideology
6.
Ideological commitment of party to your sector
7.
Ideological commitment of legislator to your sector
8.
Party history on sector related policy
(Opportunity Cost)
(Opportunity Cost)
(Opportunity Cost)
(Opportunity Cost)
49
¾ Party Ability to control electoral careers:
How important were the following in your choice of lobbying target, scale 1-5
1. Party ability to control nomination of candidates to electoral tickets
2. Party ability to control campaign funds and logistical support to individual candidates
3.
Popularity of parties rather than candidates among voters (i.e. voters vote for parties not
candidates)
(Voter Preference)
¾ Party Ability to control legislative careers:
1. Party’s control over appointments to important sector relevant committees and posts
2. Party’s ability expel a legislator from an important committee
3. Party’s ability expel a legislator from party
¾ Opportunity costs of switching out of party
•
Electoral Opportunity Costs
1. Party’s chances of re-election with control of executive
2. Party’s chances of re-election with control of the legislature
3. Party’s share of seats in legislature
•
Legislative Opportunity Costs
1. Chances of being promoted by the party to an important committee / legislative post
2. Chances of being promoted to an executive post by the party
3. Chances of being expelled by the party from an important committee
post / position for
supporting a position
4. Chances of being expelled from the party for supporting any position
5. Chances of changing parties for any reason while in office
6. Chances of running for a state level office while a legislator
¾ Legislative Factors:
How important were the following in your choice of lobbying target,
Scale 1-5
1. Influence in Drafting and designing legislation
2. Influence in deciding procedure bill will follow through committees
3. Influence in amendments and debates
4. Influence in getting more votes in favour or against a bill
5. Influence with the executive when party is in power
6. Influence with executive when party is not in power
50
¾ Individual Characteristics & Attributes: How important were the following in your choice of
lobbying target, Scale 1-5
1. General competence and ability
2. Willingness to use technical information
3.
Influence and standing within party
(Opportunity Cost)
4.
Ideology of individual legislator
5.
Popularity with voters in his constituency
6.
Concern with issues of voters in his constituency
¾ Political Uncertainty
¾ Public / Voter Factors
Control Variables
¾ Size of industry -- output
¾
Size of industry -- Workers
¾ Geographic concentration of members
¾ Distribution of firms by size
¾ Coverage of sector by organization membership
¾ External Exposure
¾ Nature of product
¾ Key role of sector
¾ Age
¾ Trends in industry growth
¾ % Funding from government
¾ % staff from government
51