Authors: Alejandro Poire
February 1, 2006
John F. Kennedy School of Government, Harvard University

This paper addresses one aspect of political finance research, by focusing on Mexico's generous publicly-financed party system at the sub-national level. It attempts to answer the question of whether public funding to political parties is a phenomenon tied up to parties' consolidation as entities of public interest, to political democratization, to politicians' rent-seeking behavior, or mostly determined by the underlying social and economic determinants of political competition. It strives to serve as a first step of a larger project that looks at the role of public funding on electoral outcomes and political representation.

The paper is organized as follows: section 2 briefly narrates the history of the current Mexican party finance system and introduces some of the less obvious enforcement dilemmas presented by public funding of political parties. This is followed with a review of the extant literature on the subject, with an emphasis on newer democracies. Section 4 introduces the data under study in greater detail as well as a set of hypotheses about the expected variation in the amounts of public funding available for state-level party chapters, as derived from the theoretical discussion. In section 5, a first group of hypothesis tests are presented and discussed in terms of their theoretical and normative implications, and the paper concludes with a summary of theoretical arguments and a description of the future steps of the project.

The evidence presented in this paper stresses the dual character of public funding in Mexico's emerging state-level democracies, both as a platform of basic competition among political parties, and as a potential instrument of detachment from pressures from outside the established party system. The level of public funding seems unrelated to its alleged role as a shield against the negative influence of illicit private contributions, but strongly determined by the political opportunities for oligopolistic behavior. Under these conditions, a host of negative implications seem more likely to be the outcome of public funding of political parties once basic competitiveness has been achieved. These implications carry theoretical weight well beyond the context from which they are derived.

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