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

Monica Martinez-Bravo, Priya Mukherjee, Andreas Stegmann

Econometrica · 2017 · Volume 85 · Issue 6

DOI: 10.3982/ECTA14125

Abstract

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.

Keywords

Elite capture, democratic transitions, de facto power, Indonesia, public good provision

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