Elections and Political Careers, Leiden University, Leiden

Essay: ‘Elections can limit corruption, because they affect

political selection and/or offer incentives to politicians to act
in the voters’ interests.’ Discuss

Module Number 6444SEPCA

Student Number s2143976

‘We find significantly less corruption in municipalities where

mayors can get re-elected. Overall, our findings suggest that

electoral rules that enhance political accountability play a

crucial role in constraining politician's corrupt behaviour’1-

Ferraz and Finan

‘The presence of term limits, combined with political parties to

which politicians are only weakly attached, affects the

incentives and behaviour of individual politicians in such a way

that their parties’ suffer systematic losses’2 - Klasnja and

Titiunik

1
Claudio Ferraz and Frederico Finan, ‘Electoral Accountability and Corruption: Evidence from the Audits
of Local Governments’, American Economic Review, 2011, No.101, p.1274
2
Marko Klasnja and Rocío Titiunik, ‘The Incumbency Curse: Weak Parties, Term Limits, and Unfulfilled
Accountability’, American Political Science Review, 2017, Vol.11 No.1, p.129

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 Elections and Political Careers, Leiden University, Leiden

These two quotes quickly give both an answer and raise issues to the essay

question posed. While the first addresses objectively the question and gives a clear answer

to it, the second questions the variables surrounding electoral accountability and some of

the rules surrounding the electoral and party systems, such as term limits and party

connections. This can help raising the issue of how much the electoral act does itself limit

corruption through political selection or by acting in the voters’ best interests.

This Essay intends to show that Elections tend to limit corruption, but not in every

case, and that it is not by all means the most effective way of limiting or eliminating

corruption. Some of the cases that elections do not seem to limit corruption are when the

incumbent is a ‘lame duck’, when Politicians have already perceived connections to other

businesses that rely on public investment, and when the incumbent is about to retire or be

replaced by the party as the party’s candidate. This essay will first present the two selected

and competing papers in order to give a better understanding of the issue and the answer

given. Both articles complement each other: While one gives an objective answer to the

Essay question and provides evidence for it, the second one will provide the context and

evidence as to why that is happening. Since Brazil is the case study of both papers, it will

also be the case study in this Essay. To analyse the context of electoral accountability

(which is a deterrent of corruption) and its effectiveness, papers regarding corruption,

term limits and term lengths will also be analysed to prove this argument.

Electoral accountability has almost always been perceived as a deterrent for

corruption amongst Politicians. This, however, has been put into question by several

scholars in the past years, who have been researching this issue. Ferraz and Finan decided

to prove the veracity of the claim and, as described in the opening quote of this essay, by

analysing the audits of local governments concluded that Incumbents that can be re-

elected tend to be less corrupt than ‘lame ducks’.

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 Elections and Political Careers, Leiden University, Leiden

Their paper brought something new to the existent literature: This paper analysed

a specific electoral period in Brazil (the 2000 municipal election) and the audits made to

certain municipalities. The fact Brazil is widely perceived to be a corrupt country, as it

only rankings 96th out of 180 countries in the Corruption Perceptions Index 2017, and

that is one of the most decentralised countries in the world figures a good reliable case

study.3 Their sample for this study are 476 audits made between 2001 and 2004 in

different municipalities across Brazil by the Ministry of Transparency and the CGU. 4 The

article accounts for three different types of corruption, which according to the authors,

are the most common amongst Brazilian politicians: Fraud in the procurement of public

goods and services; Diversion of public funds for private gain; Overinvoicing of goods

and services. The authors also decided to include another item that expresses possible

corrupt acts: Mismanagement.5 Their main results can be analysed on Tables 1 and 2.

Table 1: Summary Statistics of Corruption by Type6

3
Transparency International, Corruption Perceptions Index 2017 (2018),
https://www.transparency.org/news/feature/corruption_perceptions_index_2017 Accessed on the 17th
May 2018
4
CGU stands for ‘Controladoria-Geral da União’
5
Ferraz and Finan (2011), pp.1282-1283
6
Ferraz and Finan (2011), p.1285

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 Elections and Political Careers, Leiden University, Leiden

Table 2: Summary Statistics of Corruption by First and Second-Term Mayors7

Table 1 shows the amount of corruption (or suspicions of it in the case of

Mismanagement) that went on in many of the audited municipalities, as at least 58%

performed an illegal procurement practice. More astonishingly, almost all of them (99%)

has at least one mismanagement irregularity. Table 2 shows that the share of resources

7
Ferraz and Finan (2011), p.1286

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 Elections and Political Careers, Leiden University, Leiden

linked to corruption is 1.9% higher for second-term Mayors. The authors then test and

see the differences between first term mayors and second term mayors. The results are

particularly interesting, not because of the discrepancy of characteristics between the two,

but rather the indicators presented and what they show.

Table 3: Summary Statistics of Mayors and Municipalities8

8
Ferraz and Finan (2011), p.1287

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 Elections and Political Careers, Leiden University, Leiden

Although the authors refer that there are not any relevant differences when

comparing both first term mayors and second term, which is true, a lot can be said about

the sample by analysing this table.9 Both types of Mayors seem to have a reduced amount

of schooling (only 6 years). The sample appears to only include rural areas (as only

around 0.60% of the sample is urban), and areas where the GDP per capita was almost 3

times lower than the national average.10 This means the sample mostly includes

underdeveloped municipalities with low education. This might explain why almost every

municipality had at least one mismanagement irregularity, as the authors also prove that

first-term mayors commit more acts of mismanagement than second-term mayors. 11

Table 4: The Effects of Reelection Incentives on Corruption12

9
Only 5 out of 43 are relevant
10
Average GDP per capita in Brazil between 2001 and 2004 was 3162.31 US dollars. Average exchange
rates between the Brazilian Real and US Dollars between 2001 and 2004 was 1 US Dollar= 2.7 Reais
11
Ferraz and Finan (2011), p.1298
12
Ferraz and Finan (2011), p.1291

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 Elections and Political Careers, Leiden University, Leiden

Table 4 present us the results of their study, by using an OLS method. As it is

possible to analyse, ‘first-term mayors are associated with a 1.9 percentage point decrease

in corruption. At an average corruption level of 0.074 among second-term mayors, this

estimate represents a 27 percent decline.’13 The authors also conclude that lame-duck

mayors ‘steal approximately R$150000 more than first-term mayors.’14 The authors also

do make an RDD approach, but conclude its results are similar to those presented in Table

4. They also run different tests to estimate differences between the two items in study and

to robust their claim. In a particular test they achieve interesting results, as it is possible

to analyse in Table 5:

Table 5: Re-election Incentives and Matching Grants15

13
Ferraz and Finan (2011), p.1291
14
Ferraz and Finan (2011), p.1292
15
Ferraz and Finan (2011), p.1301

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 Elections and Political Careers, Leiden University, Leiden

As it is possible to analyse, upon elected, mayors in their first term are less likely

to receive more grants then their second term counterparts. But in subsequent years they

will be more likely than their counterparts to claim and getting more money to their

municipality as possible re-election gets closer in time. This shows there is Electoral

Accountability, at least for Politicians, who attempt to improve their municipalities as the

election gets closer. The authors also account for the importance of the media in

denouncing corrupt acts in their regions, as second term mayors are almost 10% more

corrupt if there is not any local media in the municipality.

But not everything is perfect regarding Ferraz and Finan’s study. Brazil has 5570

municipalities, and their sample comprises of only 476, which is only around 8.5% of the

full possible amount under study. As previously referred, their sample seems to mostly

include rural municipalities with low levels of development and where the amount of

education and experience of the local Politicians is more reduced. The fact the audits were

made in random municipalities adds the fact their sample could not be geographically

dispersed. The odds for a geographical concentration of samples to happen are not that

unlikely, as there are states with more than 500 municipalities (such as Minas Gerais and

São Paulo) and others with less than 20 (such as Amapá and Roraima). This can, then,

further discrepancy on the results, even though a randomized sample is usually a good

way to perform these tests.

It is also very important to underline the fact that since the CGU only audits at

most 2880 municipalities per 4 years, and only municipalities with fewer than 450

thousand inhabitants, there is a 47.81% chance a corrupt mayor in a municipality with

less than 450 thousand inhabitants will not be audited within his term, therefore giving

that mayor a chance of not being held accountable by the electorate, who is uninformed

regarding his acts.

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 Elections and Political Careers, Leiden University, Leiden

Apart from these factors, and considering the authors were analysing corruption

on those municipalities of the sample with Mayors in their first term against Mayors in

their second and last term, the results are reliable and their empirical approach,

considering the sample they had, was most likely the best possible study. The authors

conclude by referring that ‘these findings suggest that electoral rules that enhance

political accountability play a crucial role in constraining politicians, even in an

institutional context where corruption is pervasive and elites dominate local politics.’16 It

is interesting to find that the authors agree that elections by themselves might not hold

Politicians accountable for the corrupt or mismanagement acts they have done. It is in this

context that the second article under analysis in this essay emerges and to give a better

understanding of what enables incumbents in Brazil to be corrupt.

This article, entitled ‘The Incumbency Curse: Weak Parties, Term Limits, and

Unfulfilled Accountability’ might not go straight into the topic of Political Corruption,

but intentionally or not makes an excellent approach to the context and factors that might

cause Political Corruption to be more widespread in Brazil than in other countries.17 In

this article, the authors attempted to prove Brazil was suffering from a vicious cycle, as

‘the interaction between individual party weakness and electoral rules that restrict re-

election may affect individual politicians’ incentives and careers in a way that

compromises accountability, increases volatility and prevents the consolidation of the

party system necessary to break the cycle’, thus reinforcing the weakness of the party

system.18 And since Brazil is also a Presidential System with highly decentralised powers

and systems, this ‘puts strong pressures on political parties to prioritise vote-seeking over

policy, and adopt broad coalitions and diffuse ideological commitments’ at the

16
Ferraz and Finan (2011), p.1307
17
Klasnja and Titiunik (2017)
18
Klasnja and Titiunik (2017), p.131

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 Elections and Political Careers, Leiden University, Leiden

regional/state level.19 Klasnja and Titiunik also argue that term limits could be depriving

voters of electoral accountability.

One of the article’s main objectives, however, was to prove incumbent parties

were actually less likely to win the next election because they were the incumbents. To

prove this, Klasnja and Titiunik use as sample the 1996, 2000, 2004, 2008 and 2012

municipal elections creating a total of 27455 observations. Later on, they restrict the

results to only the four biggest parties of that period plus the Workers Party (PT): The

PMDB, DEM, PSDB and PP.20

It is also important to bare in mind that ‘Brazil’s national and state-level political

system are characterised by a weakly institutionalised party system, including high

electoral volatility, low levels of party identification in the electorate, high

fractionalisation, low capacity of parties to exercise discipline over their members, and a

lack of strong ideological platforms’21 This is proven by the Pedersen’s index of electoral

volatility, which in the case of Brazil is quite high: 31% of the votes allocated in one

election will be allocated differently in the next one. Parties also do not run consecutive

times very often: Only about 53% of the top 5 parties run again in the same municipality

in the next election.22 This is also due to ticket-splitting, which is frequent and where

parties usually throw their support to other candidates or parties, so they can level the race

against the front-runner. For their analysis, they use a RD design to obtain more reliable

results, as they restrict the analysis between close losers and close winners and calculated

19
Klasnja and Titiunik (2017), p.131
20
PMDB stands for Partido do Movimento Democrático Brasileiro. DEM stands for Movimento
Democrático. PSDB stands for Partido da Social Democracia Brasileira. PP stands for Partido
Progressista. PT stands for Partido dos Trabalhadores
21
Klasnja and Titiunik (2017), p.134
22
As a statistical reference, between the period 2000-2012 60% of the incumbent party ran on the
following election.

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 Elections and Political Careers, Leiden University, Leiden

the likelihood of the incumbent to win the next election. Their results can be seen on

Table 6 and Figure 1:

Table 6: RD Effect of Winning at t on Victory at t + 1 (Unconditional on

Running) for various Parties: Brazil’s Mayoral Elections, 1996-201223

23
Klasnja and Titiunik (2017), p.136

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 Elections and Political Careers, Leiden University, Leiden

The results indicate that an incumbent party who won the election by a close

margin is 15% less likely to win the next election when compared to a close loser. This

happens due to the weak party system and the fact that due to the term limits many

Politicians do not feel they are being held accountable, and thus are able to act as they

wish, instead of acting in the party’s or their constituent’s best interests, especially on the

second term, where they cannot be re-elected. This has already been proven by the former

article by Ferraz and Finan, that Politicians are more corrupt in their second term because

they feel they will not be held accountable for it. Klasnja and Titiunik also add that out

of the 2092 mayors elected for a second term in 2000, 53% (1109) came back in 2008 to

stand the election, after the mandatory hiatus. Interestingly, more than half of those ran

with a different party than the one they were running for in 2000. Evidence for this is

present on Table 7:

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 Elections and Political Careers, Leiden University, Leiden

Table 7: Career Path of Brazilian Mayors Elected in 2000 (Full Sample)24

Klasnja and Titiunik also account for social spending and reveal that freshmen

usually spend more in public good provisions than second term mayors. 25 They then

present what they believe was an exception to their study: The Workers Party (Partido

dos Trabalhadores- PT). According to them ‘the PT preserved many of its early

organisational features and remained the most disciplined party in the Brazilian party

system in the period we study’26. They make the same tests they previously did with the

other parties and conclude that while for the other parties the negative incumbency effect

is of 15%, for the PT is only 8%. Also, most members of the PT tend to stay in the party

24
Klasnja and Titiunik (2017), p.138
25
Evidence for this can be found on page 143 of the article.
26
Klasnja and Titiunik (2017), p.143

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 Elections and Political Careers, Leiden University, Leiden

and be more loyal to its core values, as more of their former mayors tended to run for

office with PT, as shown in tables 8 and 9.

Table 8: Career Path of Mayors Reelected in 2000 to Second Consecutive Term: PT vs

Other Parties27

27
Klasnja and Titiunik (2017), p.144

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 Elections and Political Careers, Leiden University, Leiden

However, is PT such a disciplined and organised party? The most recent evidence

seems to point to other directions. Since operation ‘Lava Jato’ burst into the media, the

party was widely affected: Many of the central figures of the Party were/are either arrested

or under suspicions of illegalities. Since late 2016, the Party has been losing members,

and some of the Parties that had supported the PT’s presidential ticket for the vast majority

of the elections have now reconsidered their positions regarding the 2018 race and are

running on their own, such as the Socialist Party (PSB) of Brazil and the Communist

Party (PCdoB). This national damage to the PT already saw them lose two thirds of their

municipalities in 2016, and an emergence of the PSB in the left. As for the PT, it was only

the 9th party with the most municipalities, while the PSB won almost 1.6 times more

municipalities. This can also be seen in their options for President in the 2018 elections,

as their prime choice for the ticket, former President Lula da Silva, was recently

condemned to prison for corruption, their second choice for the ticket only gathers 4% of

the public vote, while Lula, a ‘Political Dinosaur’ of the PT, is getting 31% in one of the

latest polls.28 This is also proof that even though a Politician was condemned to prison

for corruption, they can persuade people otherwise and try to get away with it.

So, perhaps PT is not as disciplined and organised as the authors conveyed, but their

evidence is still accurate. One good explanation for this is the fact that out of the 4 parties

in analysis by the authors, one is widely identified as a catch-all party (PMDB), one as

Christian Democrat (PSDB), one as center-right (DEM) and the other as right-wing

conservative (PP). On the ideological Left, the PT was always the main Party on the

national and municipal level, with high membership rates (around 1.6 million), with high-

ranked party members with low or common backgrounds (such as Lula, a former

28
Lusa, ‘Lula da Silva na frente em novas sondagens para presidenciais de outubro no Brasil’, Online
Newspaper ‘Observador’, 15 April 2018, https://observador.pt/2018/04/15/lula-da-silva-na-frente-em-
novas-sondagens-para-presidenciais-de-outubro-no-brasil/ , Accessed on the 20th May 2018

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 Elections and Political Careers, Leiden University, Leiden

Industrial Worker), and with social associations, good relationships with trade unions,

and has been the main representative of the Left since its foundation. So, PT politicians

that want to comeback into politics after 2 terms in office, only had real chances of doing

it, if they ran on the PT ticket, without drastically changing their ideology. This is the

main criticism to the article of Klasnja and Titiunik, as they present a very sound, cohesive

paper, making very good arguments supported by valid evidence.

Elections do limit corruption in the case of Brazil, but the combination of elections

with the lack of strong parties and the existence of term limits has proven to be harmful,

as there seems to be a perpetuation of the vicious cycle mentioned by Klasnja and

Titiunik. What solutions could then be adopted to help increase electoral accountability

and reduce corruption? If we go into our initial premise, more elections could then mean

more accountability, and less corruption. Thus, reducing the term length to 2 years could

be a possibility. Also, with the existent term limits in Brazil one politician could only be

out of office only 2 years at most. Shorter elections also help the fact that the National

panorama would not change much and thus not influence voters. However, as Dal Bó and

Rossi demonstrated in one of their papers, ‘shorter terms discourage effort not due to

campaign distractions but due to an investment payback logic: when effort yields returns

over multiple periods, longer terms yield a higher chance of capturing those returns.’29

Another possible solution could be an increase in wages for mayors, as Ferraz and

Finan advocate for in one of their articles. According to them ‘increases in wages are

likely to make incumbent politicians more accountable because it makes the value of

holding office in the future higher. Politicians respond by increasing their legislative

29
Ernesto Dal Bó and Martín Rossi, ‘Term Length and the Effort of Politicians’, Review of Economic
Studies, No.78, 2011, 1237

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 Elections and Political Careers, Leiden University, Leiden

effort in order to boost their chances of re-election.’30 However, it does not seem mayors

in Brazil or even MPs receive low salaries. As a title of example, the average salary of

the mayors of the municipalities of the state of Rio de Janeiro in 2012 were of

R$14395,09, 23 times higher than the minimum wage.31 Also, Brazil has the second most

expensive congress chamber. The problem does not seem that Politicians are not being

well paid, even though this measure might bring additional positive results.

However, not always bringing new incumbents seem to diminish corruption, as

Lehne, Shapiro and Eynde showed in the case of India: One incumbent might be held

accountable for his acts, but new Politicians/Freshmen with connections or networks with

the construction business increase corruption, which shows a degree of pre-disposition to

be corrupt in Politics, through the renovation of Politicians at the local level.32

The last possibility could be eliminating term limits, thus generating more electoral

accountability. Yet, Smart and Sturm argue that having two-term term limits are optimal

institution for voters, as politicians are induced to act ‘more truthfully and thus enabling

voters to choose better quality agents to a second term in office.’33

In a way, and even though Ferraz and Finan’s article ‘Electoral Accountability and

Corruption’ is the most convincing at answering the question in an objective way, by

presenting objective and accurate results, Klasnja and Titiunik’s article is also essential

to understand the root of the problem in many countries regarding the lack of electoral

accountability necessary to diminish corruption. Through this, both seem to complement

30
Claudio Ferraz and Frederico Finan, ‘Motivating Politicians: The Impacts of Monetary Incentives on
Quality and Performance’ (2009), http://www.nber.org/papers/w14906, p.4 Accessed on 20th May 2018
31
Guia Trabalhista (2018), http://www.guiatrabalhista.com.br/guia/salario_minimo.htm Accessed on
the 21st May 2018
32
Jonathan Lehne, Jacob Shapiro and Oliver Vanden Eynde, ‘Building Connections: Political Corruption
and Road Construction in India’, Journal of Development Economics, No.131, 2018, pp.62-78
33
Michael Smart and Daniel Sturm, ‘Term Limits and Electoral Accountability’, Journal of Development
Economics, No.107, 2013, p.100

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 Elections and Political Careers, Leiden University, Leiden

each other, giving a clear understanding of the corruption and the lack of electoral

accountability in Brazil.

To conclude, Elections limit corruption only to an extent and in certain situations.

This essay especially focused in the case of Brazil and the existent electoral framework.

Even though incumbents in the first term might be encouraged to not be corrupt with the

prospect of re-election, elected incumbents to a second term engage more in corrupt acts,

as proven by Ferraz and Finan.34 The second article proved vital towards an

understanding of the context: The Brazilian political ‘state of affairs’, where it was

concluded that the existence of weak parties and weak party systems combined with term-

limits, low levels of party identification and high electoral volatility, creating a vicious

cycle that enables Politicians to be corrupt with possibilities of not ever being held

accountable for it.

34
Ferraz and Finan (2011)

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Bibliography:

Dal Bó, Ernesto and Rossi, Martín, ‘Term Length and the Effort of Politicians’, Review

of Economic Studies, No.78, 2011

Ferraz, Claudio and Finan, Frederico, ‘Electoral Accountability and Corruption: Evidence

from the Audits of Local Governments’, American Economic Review, 2011, No.101

Ferraz, Claudio and Finan, Frederico, ‘Motivating Politicians: The Impacts of Monetary

Incentives on Quality and Performance’ (2009), http://www.nber.org/papers/w14906,

Accessed on 20th May 2018

Guia Trabalhista (2018), http://www.guiatrabalhista.com.br/guia/salario_minimo.htm

Accessed on the 21st May 2018

Klasnja, Marko and Titiunik, Rocío, ‘The Incumbency Curse: Weak Parties, Term Limits,

and Unfulfilled Accountability’, American Political Science Review, 2017, Vol.11 No.1

Lehne, Jonathan, Shapiro, Jacob and Eynde, Oliver Vanden, ‘Building Connections:

Political Corruption and Road Construction in India’, Journal of Development

Economics, No.131, 2018

Lusa, ‘Lula da Silva na frente em novas sondagens para presidenciais de outubro no

Brasil’, Online Newspaper ‘Observador’, 15 April 2018,

https://observador.pt/2018/04/15/lula-da-silva-na-frente-em-novas-sondagens-para-

presidenciais-de-outubro-no-brasil/ , Accessed on the 20th May 2018

Smart, Michael and Sturm, Daniel, ‘Term Limits and Electoral Accountability’, Journal

of Development Economics, No.107, 2013

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Transparency International, Corruption Perceptions Index 2017 (2018),

https://www.transparency.org/news/feature/corruption_perceptions_index_2017

Accessed on the 17th May 2018

Word Count: 3368 (Without Bibliography or References)

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