Political institutions and the wealth of regions: Swiss cantons in comparative perspective

Abstract:

This investigation evaluates the effects of political institutions on the wealth of regions. It provides an empirical test of how consensus democracy, institutional decentralization, and plebiscitary instruments influence economic performance of the Swiss cantons. Our pooled cross-sectional time-series analyses show that direct democracy and institutional centralization are particularly forceful political determinants of economic performance, while the type of democracy is not systematically associated with economic wealth. Moreover, part of the variation in economic power between the Swiss cantons in the 1990s is explained by differences in educational expenditure and in the degree of overall taxation.