Econometrica: Nov, 2017, Volume 85, Issue 6

The Non-Democratic Roots of Elite Capture: Evidence from Soeharto Mayors in Indonesia

https://doi.org/10.3982/ECTA14125
p. 1991-2010

Monica Martinez‐Bravo, Priya Mukherjee, Andreas Stegmann

Democracies widely differ in the extent to which powerful elites and interest groups retain influence over politics. While a large literature argues that elite capture is rooted in a country's history, our understanding of the determinants of elite persistence is limited. In this paper, we show that allowing old‐regime agents to remain in office during democratic transitions is a key determinant of the extent of elite capture. We exploit quasi‐random from Indonesia: Soeharto‐regime mayors were allowed to finish their terms before being replaced by new leaders. Since mayors' political cycles were not synchronized, this event generated exogenous variation in how long old‐regime mayors remained in their position during the democratic transition. Districts with longer exposure to old‐regime mayors experience worse governance outcomes, higher elite persistence, and lower political competition in the medium run. The results suggest that slower transitions towards democracy allow the old‐regime elites to capture democracy.

Supplemental Material