Political Finance Research Articles

The Politics of Central Banking in Kenya: Balancing Political and Developmental Interests

This paper analyses the performance of the Central Bank of Kenya (CBK) in delivering on its mandate since the organisation gained formal independence in the early-1990s. It utilises a political settlements approach, tracking how the distribution of power has shaped CBK’s effectiveness over time. The paper finds that Kenya’s political settlement has constrained CBK’s performance in certain respects, particularly with regards to financial sector supervision, where the organisation must operate within a tight set of political constraints because of the sector’s importance in enabling vital patronage networks and generating political financing for elections. This has often incentivised CBK governors to undertake incremental reforms that balance developmental and political interests; governors who have not been willing to compromise in this way have undermined the organisation’s independence and autonomy by provoking a backlash. The paper also finds that Kenya’s competitive clientelist political settlement has caused difficulties for CBK in undertaking its price stability mandate. This is particularly the case during election periods, when the organisation faces pressure to adopt a looser stance. Nonetheless, despite these pressures, the paper finds that CBK has, overall, been effective in delivering on its core mandate throughout the period under analysis, to the extent that it can be labelled a long-standing ‘pocket of effectiveness’. This is because three other sets of factors have played a kind of countervailing role, by keeping CBK relatively insulated from the most corrosive aspects of Kenya’s competitive clientelism. These are: transnational factors; ideas and ideology; and organisational-level factors, including CBK’s leadership and its formal and informal sources of autonomy.

How Does Digital Campaigning Affect the Problems of Political Finance?

This paper deals with the intersection between three sets of challenges that constitute existential threats to democracies across the world. The first is money in politics which not only poses the danger of ‘policy capture’ but also, in worse scenarios, state capture by monied interests. As the United Nations Deputy Secretary-General, Amina Jane Mohammed has said: ‘In many places the ability of private interests to influence elections is unfettered and the capture of the state by elites is warping the functions of state institutions.’ The second is the impact of digital technologies on elections. As the International IDEA’s 2019 Global State of Democracy report observed, ‘[n]ew technologies, including information and communications technologies (ICTs) and social media, are contributing to a profound transformation of the global democracy landscape’.The principal question addressed by this paper is poised at the meeting place between these challenges: How might digital campaigning affect the problems of political finance? Also integrated into the analysis is a third set of challenges. Here I refer to those arising from the COVID-19 pandemic, with the paper reflecting upon how the pandemic might shape the impact of digital campaigning on the problems of political finance.This paper is written by way of a road-mapping exercise. It seeks to draw out the key issues in determining the impact of digital campaigning on the problems of political finance with a sprinkle of examples for the purpose of illustration. All this is very much preliminary analysis with the paper aiming to be a conversation starter.

Political finance regimes and party system size: evidence from new and established European democracies

AbstractStudies of party system size have looked at institutional and sociological factors in their attempt to explain what determines the number of parties. While some recent studies contend that party laws, beyond the district magnitude, have a significant impact on, among others, new party entry, we know very little about whether certain rules matter more in some societies than they do in others. In this paper, we study the extent to which various party finance rules affect party system size and differentiate the effect between new and established democracies. Specifically, we focus on direct and indirect public subsidization and limits on private donation and campaign expenditure. We hypothesize that compared to established countries, new democracies tend to have a larger party system size when the political finance rules create more equal conditions for electoral competition. Using data from 43 Europe democracies, the empirical analyses support our hypothesis.

Book review: Devesh Kapur and Milan Vaishnav, eds. Costs of Democracy: Political Finance in India

Devesh Kapur and Milan Vaishnav, eds. Costs of Democracy: Political Finance in India. Delhi, India: Oxford University Press. 2018. 324 pages. ₹750. ISBN: 9780199487271.

Why change party finance transparency? Political competition and evidence from the ‘deviant’ case of Norway

AbstractThis article focuses on the development of a key type of regulation ensuring public surveillance of political finance: party finance transparency rules. It makes two contributions to the emerging theory on the evolution of political finance regulation. First, using previous research, it conceptualises the underlying causal mechanisms that explain when and why party finance transparency regulation changes. Second, it presents the first detailed study of party finance transparency reforms in Norway, which is a deviant case for the introduction of such reforms. It is found that, in the absence of major scandals, an intense political discourse on corruption and political competition are sufficient factors to launch transparency reforms. Whether reforms are enacted depends on the interaction of several factors. Parties that predominantly rely on state funding and grassroots support push for and adopt more constraining transparency regulation, while parties that are close to business oppose it. Experience of regulation in similar contexts and intense discourse on corruption – stimulated by domestic or international events – are necessary for the reform to succeed. Norwegian cooperation with the Group of States against Corruption (GRECO) further demonstrates that the success of party finance transparency reforms initiated by a foreign actor is a function of the existing tradition of party regulation, the policy position of a governing party and the international reputational costs of non‐compliance.

Do Political Finance Reforms Reduce Corruption?

AbstractReformers claim that public subsidies and regulation of political finance reduce corruption in politics, while observers worry that they have no impact on corruption, or even increase it. Despite national-level debates and billions of dollars spent, few studies have tested this relationship. The authors argue that political finance reform mitigates corruption by reducing private money's importance in politics and increasing the sanctions for corrupt behavior. Elite interviews from Paraguay's political finance reform illustrate the argument and elaborate the theoretical mechanisms. The study evaluates the argument using an original dataset measuring political subsidies from 175 countries from 1900–2015, as well as disaggregated corruption measures from the Varieties of Democracy project. The findings support the thesis that political finance reform reduces corruption, even in countries where such reforms are unevenly implemented.

The Meaning of the “Marketplace of Ideas” in First Amendment Law

The 1919 First Amendment opinions of Oliver Wendell Holmes and Louis Brandeis comprise the seminal texts in the cannon that now includes hundreds of decisions by the Supreme Court of the United States interpreting the core of the American free speech tradition. The marketplace of ideas metaphor they developed has been invoked constantly by Supreme Court justices in First Amendment cases. It has achieved genuine load-bearing legal significance, particularly in certain arenas of free speech law, and over-arching significance in rendering the entire architecture of modern free speech law reasonably coherent and stable. This essay explores the importance of the marketplace metaphor in three discrete areas of modern free speech law: commercial speech, political campaign finance, and tort liability. While by no means the only arenas in which the marketplace metaphor has exerted important influence, these three exemplars are especially illuminating, exposing at once the strengths and weaknesses of the marketplace metaphor as a persuasive tool for ordering free speech doctrines. The essay then examines the marketplace metaphor from a wide-angle lens, making the argument that it operates to define two of the central continental divides of modern free speech law. The essay goes a long way toward providing a descriptively clear and normatively convincing account of free speech law as it currently stands.

Capture the flag: local factionalism as electoral mobilization in dominant party Uganda

ABSTRACTThis article addresses a question relevant to many non-democratic regimes: how can a successful dominant party be an institutionally weak one? President Yoweri Museveni and his National Resistance Movement (NRM) have dominated Ugandan politics since coming to power in 1986. However, the NRM does not possess many of the institutional endowments that other dominant parties use to control mass and elite politics, such as central control of candidate selection, autonomous mobilizing structures, or dispensation of sufficient political finance to its candidates. Instead, the party secretariat has no real institutional power independent of the personalist Museveni regime, and its local branches house fierce internal competition each election in which most incumbents lose office. This article argues that the NRM mobilizes so well for Museveni despite its institutional deficits due to the precise nature of the competitive process its local elites go through to win its nomination (or “flag”) and the subsequent general election. This process sees self-organized and self-financed candidates and their factions rejuvenate the party and mobilize votes for the concurrent presidential election as a by-product of their competition with one another. The article makes this argument with qualitative data from three districts gathered during the 2016 elections.

TRANSPARENCY OF FINANCING POLITICAL ACTIVITIES: INTERNATIONAL LEGAL EXPERIENCE AND PRACTICE OF UKRAINE

TRANSPARENCY OF FINANCING POLITICAL ACTIVITIES: INTERNATIONAL LEGAL EXPERIENCE AND PRACTICE OF UKRAINE

Analisis Pengelolaan Dana Partai Terhadap Masa Depan Partai Politik: Sebuah Kajian Penguatan Party-ID Terhadap Partai Politik Baru 2019

This article tries to look at the opportunities that new political parties in Indonesia have to provide political education related to the issue of political finance transparency as social capital in increasing participation to electoral support in society. The Law on Public Information Openness (UU KIP) and the Law on Political Parties have obliged political parties to manage their finances with the principles of transparency and accountability, but most have not yet revealed the reporting of political party financial reports that are publicly published. Focusing on the emergence of 4 (four) new political parties that participated in the 2019 election contestation, gave rise to opportunities to be able to attract voter sympathy in order to gain electoral potential by demonstrating internal financial management, bringing transparency through clear financial reports. With a descriptive qualitative approach it was found that the relationship between the identity of political parties and the management of political party funds towards 4 (four) new political parties was still weak. This phenomenon is a result of still being "blurred" and covered by issues of transparency and accountability of funding by new political parties.

Analisis Pengelolaan Dana Partai Terhadap Masa Depan Partai Politik: Sebuah Kajian Penguatan Party-ID Terhadap Partai Politik Baru 2019

This article tries to look at the opportunities that new political parties in Indonesia have to provide political education related to the issue of political finance transparency as social capital in increasing participation to electoral support in society. The Law on Public Information Openness (UU KIP) and the Law on Political Parties have obliged political parties to manage their finances with the principles of transparency and accountability, but most have not yet revealed the reporting of political party financial reports that are publicly published. Focusing on the emergence of 4 (four) new political parties that participated in the 2019 election contestation, gave rise to opportunities to be able to attract voter sympathy in order to gain electoral potential by demonstrating internal financial management, bringing transparency through clear financial reports. With a descriptive qualitative approach it was found that the relationship between the identity of political parties and the management of political party funds towards 4 (four) new political parties was still weak. This phenomenon is a result of still being "blurred" and covered by issues of transparency and accountability of funding by new political parties.

Afinando la gobernanza electoral: lecciones aprendidas para la nueva reforma mexicana

Los procesos electorales en América Latina han afinado un conjunto de experiencias que bien podrían constituir lecciones comparadas para los países de la región orientadas mejorar la calidad de sus procesos electorales. La presente contribución, en este sentido, consiste en analizar en qué medida los procesos de reforma electoral pueden derivar en una mejor representación, participación, inclusión y gobernabilidad electoral. Teniendo en cuenta las experiencias regionales, se hace un balance del caso mexicano y se determinan los cambios que podrían impulsarse, concentrándose especialmente en la administración electoral y sus procesos de gestión, el financiamiento de la política, la democracia interna de los partidos políticos, la reelección, los sistemas electorales, las candidaturas independientes, la tecnología y el voto en el extranjero.

Devesh Kapur and Milan Vaishnav, eds. Costs of Democracy: Political Finance in India

Most Indian voters will tell you that there are three things a politician needs to succeed: Media, muscle, and money. Costs of Democracy focusses on the latter and, by doing so, addresses a lacuna in our understanding of electoral dynamics in the world’s largest democracy. In contrast to the two other indispensable “M”s that a politician needs to emerge victorious, money and its role in shaping Indian political life remains understudied. Thus, the importance of the media—both conventional and...

Party Identification, the Policy Space and Business Donations to Political Parties

Political finance scholars have paid little attention to the partisan preferences of business donors. This was because business donors were overwhelmingly concerned with the left-right dimension and enjoyed stable relationships with centre-right parties. These parties are increasingly tempted by economic nationalism. This new ideological flux provides an opportunity to measure the extent to which donors are party identifiers or react to changes in the policy space. Dramatic shifts in party policy on both the left-right and globalisation dimensions and a relatively transparent political finance regime make the United Kingdom a particularly apposite case to study this question. I analyse 19,000 donations to the Conservative Party and show that business donors reacted strongly to recent shifts on both the left-right and globalisation dimensions. Thus, centre-right parties may not be able to rely on party identification and their left-right position to maintain business funding. Economic nationalism is likely to cost centre-right parties money.

Is My Foreign Yours? The Concept of Foreignness in the Regulation of Political Finance

ABSTRACTDebates over ‘foreign’ political influence focus on the regulatory ‘why’ and ‘how’. This masks deeper questions about ‘who’ is foreign. Is foreignness a factor of where money is housed or its owner’s status? What of permanent residents and citizens abroad? This article unearths the debate in two stages. First, it analyses ‘foreignness’ as a general socio-legal concept linked to xenophobic wariness of, or outright aversion to others. Yet in modern liberal legal orders, outright discrimination is not an acceptable method or motivation for regulation. Instead, three distinctive, underlying conceptions of foreignness are identified within liberal legalism: jurisdiction, political community, and material interconnectedness. Application across five anglophone democracies shows that political finance law in each of those countries embodies aspects of every conception. Given they are distinguishable, this suggests not only that regulation in this area is still evolving normatively but, more importantly, that ‘foreignness’ is a rich conception not easily captured in a single definition. Revealingly, although foreignness is logically a nested and symmetric idea, regulation rarely touches influence between federal regions or actions of local corporations abroad.

Political Finance Regulation and Reform in New South Wales: Towards a Fairer System?

In recent years the regulation of political finance in Australia has moved from systems of laissez‐faire to systems of enhanced regulation, which aim to curb the scale and influence of donations. This article examines political finance regulation in New South Wales — the jurisdiction that has seen the most significant transformation of its regulatory setup — to assess whether and how the new regulations have affected donations to political parties in the state. We find, based on analysis of the pattern of donations before and after the reforms, that the regulations have made the financing system fairer and thus improved the quality of democracy in the state.

Political finance: a study on the financing of political parties

Parties as active units in this process in order to work must have access to sources of funding in order to maintain their political presence in society and participate in the process of electoral competition, To win the election, bolstering the huge role that money has played in influencing the principle of equality among contestants in the elections. Those who own money will have a greater chance of winning the elections while less competitive opportunities for others who do not own the money or what they own does not give them the competitive ability to win elections. From this point of view, controlling political finance through legal regulation and institutional, media and popular monitoring has become an important requirement for a successful democratic electoral process.

Political Financing Reform: Politics, Policies and Patronage in Malaysia

ABSTRACTThis article analyses the evolution of political finance reform debates in Malaysia, one of the world’s most durable electoral authoritarian regimes. While the reliance of the dominant party, UMNO, on unfettered resources remained unchanged, crises in Malaysia’s political environment allowed civil society actors to concretise abstract debates over reform into specific proposals. Drawing from interviews, public statements and observation, two distinct periods in this reform debate are analysed: after Najib Razak assumed power in 2009, following the unprecedented electoral success of the opposition during the 2008 general election; and after the 1MDB scandal broke in 2015. In both periods, civil society actors took advantage of new political dynamics to present specific proposals for political finance reform. These proposals laid the groundwork for government-led reform recommendations, though key provisions were excised that would curb UMNO’s power. Reform efforts stalled when the government resisted deeper reform while opposition parties offered little support for the proposed changes. This article reviews an under-researched area of policy interactions in electoral authoritarian regimes involving not just the ruling party and the opposition, but also civil society. A postscript considers the trajectory of this debate following the 2018 national elections which toppled UMNO from power.

If Money Talks, What Does It Say About Brexit?

Political finance scholars have paid little attention to the partisan preferences of business donors. This was because business donors were overwhelmingly concerned with the left-right dimension and enjoyed stable relationships with centre-right parties. These parties are increasingly tempted by nationalist positions on a globalisation dimension. This new ideological flux provides an opportunity to measure the extent to which donors are party identifiers or react to changes in the policy space. Dramatic shifts in party policy on both dimensions and a relatively transparent political finance regime make the UK a particularly apposite case to study this question. I analyse 19,000 donations to the Conservative Party and show that business donors reacted strongly to recent shifts on both the left-right and globalisation dimensions. Thus, centre-right parties cannot rely on party identification and their left-right position to maintain business funding. Economic nationalism costs centre-right parties money.

Where's the Party?: Towards a Constitutional Biography of Political Parties in India

Although the original text of the Indian Constitution did not mention political parties, parties are one of the most crucial institutions for the actual functioning of our constitutional structures. I go back to the founding to inquire how the framers understood the relationship between party dynamics and constitutional design. The founding debates aptly demonstrate a two-way relationship between parties and constitutional law. These debates not only help us move towards a realist account of how our constitution works, but also demonstrate various modes and functions of constitutionalization of political parties. Constitutionalization of parties may not only restrain the distortion of division of State power, but also improve the health of party competition. Moving beyond founding, I will discuss the causes of the anti-defection amendment (the only provision in the Constitution that mentions ‘political party’) and the way it has fundamentally transformed the constitutional characterization of our democracy – from the old candidate-based representative democracy to a party-based one. This constitutional transformation causes an inconsistency in the Indian law of democracy: while the anti-defection jurisprudence recognizes parties as the fundamental unit of representation, general election law continues with the old conception of candidates as the primary representative unit – a point crucial to debates on a wide array of issues ranging from political finance to party liability.