Effects of Democratic

Institutions
DOVIL PURICKAIT, SANTA MILAEVIIT, SKIRMANT RIMKUT.

Democratic Institutions
Rule-based structures:

political parties;
electoral system;
formed communities or organizations;
type of government and regime.

Objectives:

enable participation;
assure open and fair political competition;
allow to legitimate rulers;
provide a forum for rational discussion of political
problems (Luckham, Goetz, Kaldor, 2003).

Majoritarian or Consensus?
Majoritarian

Consensus

Power

Concentrated

Dispersed

Regime

Parliamentary

Presidential

Government
system

Unitary

Federal

Electoral system

Majoritarian

Proportional

Examples

United Kingdom,
Barbados

Belgium, Netherlands,
Switzerland

Literature Review
Effects of democratic institutions
Satyanah and Subramanian, 2004: impact on
long-run nominal macroeconomic stability. A
one standard deviation increase in
democracy can reduce nominal instability
nearly fourfold .
Kinda, Somlanare Romuald, 2011:
contradictory effects on the quality of
environment:
positive direct impact on environment
quality;
negative indirect impact.

Literature Review II
Effects of democratic institutions
Li and Resnick, 2003: contradictory effect on
foreign direct investment (FDI) inflows:
prevent FDI inflows;
encourage FDI inflows.
Jungbu, 2010: positive effect on levels of public
R&D spending. In addition, expenditures are
higher in presidential democracy than in
parliamentary.

Hypothesis

Countries with presidential

governance system tend to spend
more on military than countries
with parliamentary one

Governing Systems
Presidential
Executive and legislative powers - separated.
Head of government is also a head of state.
Parliamentary
Executive and legislative powers interconnected.
The top executive authority in the government
is also the central leader of the majority party
in the legislature.

Military Expenditure
According to the SIPRI database, military
expenditure includes
military and civil personnel;
operations and maintenance;
procurement;
military research and development;
military aid.

Testing Hypothesis
DD index

DD index

Testing Hypothesis
SIPRI database
Consists of 171 countries statistics from 1988
to 2015
We took 65 countries data from 2001 to
2015.
Sample of
31 presidential countries,
34 parliamentary countries.

Testing Hypothesis
Wealth Bias
Large variations in economic performance of
countries.
Might be that presidential countries are just
wealthier.
Mann-Whitney U statistical test found that
distribution of expenditure is the same
across two regimes.

Testing Hypothesis
Military expenditure according to
regime

Conclusion
Hypothesis is rejected as actually countries
with parliamentary governance systems tend
to spend more on military than those with
presidential governance systems.

Questions
1. Would you consider democratic institutions
having effect on everything or does it bypass
some areas?
2. Could you think of any reasons why
parliamentary regimes are spending more on
military than presidential ones?