Elections can significantly affect the implementation of economic policies. The increased accountability of incumbents to citizens at the climax of their political tenure creates an incentive for politicians to adopt beneficial economic policies prior to an election.
Presidential elections are one of the most important political events and their outcome determines the success of any economy. In light of the imminent 2019 General Elections in Nigeria, this post will be useful in understanding possible changes in the country's economic position in the coming months. In reality, elections are won in the year before and the outcome of elections are simply a manifestation of policies enacted in the previous year.
A plethora of studies into elections and economic policies have shown that politicians tend to manipulate the economy to create a false illusion of growth and improvement. This simply entails that; current presidents implement policies that stimulate short-term economic growth right before elections to improve their chances of being re-elected. Likewise, voters are known to support politicians who improve their personal economic situation and punish those who do not, by not voting for them; this is known as the sanctioning model.
Edward Tufte's Political Control of the Economy is the most comprehensive explanation of this phenomenon. He argues that politicians shape economic policies by increasing transfer payments before an election. These policies are rewarded by voters which then creates a two-year electoral-economic cycle in which economic indicators fluctuate with the occurrence of national elections.
This political strategy of manipulating economic fundamentals prior to elections tends to be highly successful in developing countries, where the electorate lacks both education and access to adequate information, to properly assess the validity of these hasty economic commitments. Unfortunately, media outlets also tend to be affiliated with political parties and lack the capacity to report bias-free news during this period. As a result, a significant portion of the population is exposed to the risk of electing a candidate based on propaganda and economic populism.
Although these short-term economic policies (which may take the form of expansionary fiscal and monetary policy) seem to be beneficial in the short run; if they are not compatible with the condition of the domestic and international economy, then the country risks going into economic crisis post-election. At this point, voters begin to realize the ramifications of their poor decision, as their economic prosperity is short-lived. For example, in Nigeria, 1993 was the first time a presidential election was held since the 1983 military coup; government expenditure as a percentage of GDP increased from 17% to 33% that year and declined to 22% in the post-election year.
Overall, economics and politics are inescapably intertwined. With the recent rise in crude oil prices and the slow recovery of the economy, there is no doubt that the Nigerian government will be quick to enact economic policies that increase government spending and stimulate growth. While this is imperative to reverse the difficult economic situation Nigerians have been subjected to; it could potentially make voters myopic as they begin to visualize a stronger and more efficient economy in the short-term. If this occurs and the political business cycle prevails, this will proffer relevant insight into the economic preference of Nigerian voters, and the outcome could be consequential for long-term growth and the health of Nigeria's illiberal democracy.
In the coming months, I think it will be particularly noteworthy to observe whether the perception of the current administration will be based on their overall performance over the past years (retrospectively), or whether voting decisions will be influenced by the economic policies put in place as we draw closer to the elections (prospectively). It will also be interesting to identify whether individuals judge the economy and make voting decisions based on their personal financial situation (egotropically), or based on the state of the national economy as a whole (sociotropically).