Does the World Economy Swing National Elections?*


  • *

    Thanks are due to Geoffrey Brennan, Magnus Feldmann, Seema Jayachandran, Dale Jorgenson, Warwick McKibbin, John Quiggin, Susanne Schmidt, Gilles Serra, Martin West, two anonymous referees and Associate Editor Jonathan Temple for feedback on earlier drafts. I am particularly indebted to Christopher Jencks and Justin Wolfers for valuable discussions.


Do voters reward national leaders who are more competent economic managers, or merely those who happen to be in power when the world economy booms? Using data from 268 democratic elections held between 1978 and 1999, I compare the effect of world growth (luck) and national growth relative to world growth (competence). Both matter, but the effect of luck is larger than the effect of competence. Voters are more likely to reward competence in countries that are richer and better educated; and there is some suggestive evidence that media penetration rates affect the returns to luck and competence.