Entrepreneurs Establishing Political Connection: Do They Finance Political Parties or Politicians?

Article studies the advantages of 2 types of political connections with data from private enterprises

From:: Department for International Development
Published: 1 September 2016

Country:: Burkina Faso
Document Type:: Journal Article
Theme:: Governance and Conflict
Authors:: Akouwerabou, B.D.

Abstract

Political connection is multiform, and each of its components may affect the enterprise in different ways. In this article, the author studied the advantages of 2 types of political connections with data from private enterprises. An enterprise can financially support a political party’s campaigns or support only a single candidate of a political party.

The enterprises choose between these 2 types of political connections according to the respective profitability of each. The author makes use of primary data collected in 2014 from enterprises that take part in Burkina Faso’s public procurements to analyze the expenses and profits linked to each of these political connections. The database helped dentify 3 categories of enterprises according to the type of political connection being implemented:

first category of enterprises financially supports only political parties
second finances only politicians
third category is composed of those that finance both politicians and political parties.

The data shows that the enterprises that establish both types of political connections bear more expenses. These enterprises also earn more public contracts. The difference in treatment between these 3 types of enterprises is only viewed at the level of the number of public contracts obtained.

This process allows us to say that the only advantage linked to the establishment of political connection in Burkina Faso is the profitability linked to government procurements. Data does not address the hypothesis of tax reduction as a benefit of a given category.

This research was funded under the Private Enterprise Development in Low-Income Countries (PEDL) Programme

Citation

Akouwerabou, B.D. Entrepreneurs Establishing Political Connection: Do They Finance Political Parties or Politicians? SAGE Open. July-September 2016: 1–12p