Edmund J. Malesky

Nodding or Needling: Analyzing Delegate Responsiveness in an Authoritarian Parliament

Recent scholarship argues that one solution to ensure longevity and economic growth in an authoritarian regime is to co-opt potential opposition by offering them limited policy influence in a national legislature. Although cooptation theory generates a number of predictions for delegate behavior within an authoritarian parliament, the opacity of such regimes has made empirical confirmation difficult. We resolve this problem by exploiting the transcripts of query sessions in the Vietnamese National Assembly, where delegates question the prime minister and Cabinet members on important issues of the day. Using a content analysis of queries, we offer the first empirical test of delegate behavior in nondemocratic parliaments. We find that some delegates exhibit behavior consistent with cooptation theory by actively participating in sessions, demonstrating criticism of authorities, and responding to the needs of local constituents. Such responsiveness, however, is parameterized by regime rules for nominating, electing, and assigning parliamentary responsibilities to individual delegates.

Straight Ahead on Red: How Foreign Direct Investment Empowers Subnational Leaders

This paper tests the hypothesis that increasing stocks of foreign direct investment (FDI) can lead to de facto decentralization in the form of autonomous reform experiments by subnational leaders. Because these reform experiments may attract FDI in subsequent years, there is a possibility of endogeneity. As a result, the methodology is a simultaneous equation model of 61 Vietnamese provinces between 1990 and 2000. Stocks of FDI as a percentage of GDP are regressed on a measure of autonomy derived from a content analysis of Vietnamese state-owned newspapers. Every time a province is cited in the papers for violating central laws on economic policy by engaging in reform experimentation, it is coded as a case of autonomy. The central question of the analysis is: how much FDI is needed for a province to believe it has the bargaining power to challenge central authority for the first time in a given year? Using this approach, I find strong evidence for the influence of FDI on local autonomous economic reform experiments.

The Contribution of Veto Players to Economic Reform

Contrary to the conventional understanding that reform is more difficult when veto players are numerous, we show formally that veto players may encourage policy change by weakening the power of special interests that prefer inefficient reform outcomes. Using the same model, we demonstrate that reform reversals are less likely in the presence of multiple veto players, implying that a constitutional framework conducive to initial reforms may also lock in those achievements over time. We find support for our theoretical perspective in a study of the relationship between veto players and reform in Eastern Europe and the former Soviet Union.

Politics and Foreign Direct Investment

For decades, free trade was advocated as the vehicle for peace, prosperity, and democracy in an increasingly globalized market. More recently, the proliferation of foreign direct investment has raised questions about its impact upon local economies and politics. Here, seven scholars bring together their wide-ranging expertise to investigate the factors that determine the attractiveness of a locale to investors and the extent of their political power. Multinational corporations prefer to invest where legal and political institutions support the rule of law, protections for property rights, and democratic processes. Corporate influence on local institutions, in turn, depends upon the relative power of other players and the types of policies at issue.

The Adverse Effects of Sunshine: A Field Experiment on Legislative Transparency in an Authoritarian Assembly

An influential literature has demonstrated that legislative transparency can improve the performance of parliamentarians in democracies. In a democracy, the incentive for improved performance is created by voters’ responses to newly available information. Building on this work, donor projects have begun to export transparency interventions to authoritarian regimes under the assumption that nongovernmental organizations and the media can substitute for the incentives created by voters. Such interventions, however, are at odds with an emerging literature that argues that authoritarian parliaments primarily serve the role of co-optation and limited power sharing, where complaints can be raised in a manner that does not threaten regime stability. We argue that under these conditions, transparency may have perverse effects, and we test this theory with a randomized experiment on delegate behavior in query sessions in Vietnam, a single-party authoritarian regime. We find no evidence of a direct effect of the transparency treatment on delegate performance; however, further analysis reveals that delegates subjected to high treatment intensity demonstrate robust evidence of curtailed participation and damaged reelection prospects. These results make us cautious about the export of transparency without electoral sanctioning.

Predictable Corruption and Firm Investment: Evidence from a Natural Experiment and Survey of Cambodian Entrepreneurs

This paper utilizes a unique dataset of 500 firms in ten Cambodian provinces and a natural experiment to test a long-held convention in political economy that the predictability of a corruption is at least as important for firm investment decisions as the amount of bribes a firm must pay, provided the bribes are not prohibitively expensive. Our results suggest that this hypothesis is correct. Firms exposed to a shock to their bribe schedules by a change in governor invest significantly less in subsequent periods, as they wait for new information about their new chief executive. Furthermore, the amount of corruption (both measured by survey data and proxied by the number of commercial sex workers) is significantly lower in provinces with new governors. Our findings are robust to a battery of firm-level controls and province-level investment climate measures.

Unbundling the Relationship between Authoritarian Legislatures and Political Risk

A strong statistical association between legislative opposition in authoritarian regimes and investment has been interpreted as evidence that authoritarian legislatures constrain executive decisions and reduce the threat of expropriation. Although the empirical relationship is robust, scholars have not provided systematic evidence that authoritarian parliaments are able to restrain the actions of state leaders, reverse activities they disagree with, or remove authoritarian leaders who violate the implied power-sharing arrangement. This article shows that authoritarian legislatures, by providing a forum for horse trading between private actors, are better at generating corporate governance legislation that protects investors from corporate insiders than they are at preventing expropriation by governments. The statistical analysis reveals that the strength of authoritarian legislatures is associated with corporate governance rules and not expropriation risk.

Gerrymandering – Vietnamese Style: Escaping the Partial Reform Equilibrium in a Nondemocratic Regime

Hellmans (1998) depiction of the Partial Reform Equilibrium (PRE) presented a prophecy of despair for many transition economies. Because winners from initial economic reforms could use their newfound power to block further reform initiatives that might undermine their lucrative positions, escaping the PRE trap required the simultaneous resolution of two conundrums. Policymakers interested in furthering transition needed to both overcome opposition from the concentrated group of early winners and unite a disparate group of potential beneficiaries from future reforms into an alternative coalition. In this article, I rigorously test the theory that Vietnamese reformers managed to solve both dilemmas and to escape their unique partial reform trap through the targeted creation of new provinces in 1996. The tactic provided reformers with a majority of votes in the Central Committee, allowing them to push through a series of economic initiatives directly at odds with the State Owned Enterprise Sector, Vietnams early winners.

Out of the Gray: The Impact of Provincial Institutions on Business Formalization in Vietnam

Scholars have long argued that institutional context significantly influences business strategy and economic performance. Research on the relationship between institutions and business strategy, however, has overwhelmingly focused on the decisions of larger, established corporations, mostly neglecting the strategic thinking of smaller, more entrepreneurial ventures. This article seeks to correct this bias by focusing the analysis directly on the critical decision of small-scale entrepreneurs to move from the informal and largely unregulated sector into operation as formal companies. Using a unique dataset and ranking of provincial governance institutions from Vietnam, the authors show that improvements in institutions make firms more likely to choose the formal sector from the start and, for those who do not, to spend less time in the informal sector. The study also finds that property rights have a more salient impact on formalization than other types of institutions.

Institutions and Inequality in Single-Party Regimes: A Comparative Analysis of Vietnam and China

Despite the fact that China and Vietnam have been the world’s two fastest growing economies over the past two decades, their income inequality patterns are very different. In this paper, we take a deep look at political institutions in the two countries, demonstrating that profound differences between these polities influence distributional choices. In particular, we find that elite institutions in Vietnam encourage the construction of broader policy-making coalitions, have more competitive selection processes, and place more constraints on executive decision-making than exists by way of elite institutions in China. As a result, there are stronger political motivations for Vietnamese leaders to provide equalizing transfers that limit inequality growth among provinces.