The economic consequences of businesspeople in politics: A survey

Abstract

To which extent does business experience of politicians influence economic policies and economic outcomes? I review the new empirical literature which examines this question. The survey encompasses the literature on business politicians at the national, sub-national and local level. The results show that business politicians were active in promoting globalization and market-oriented economic reforms and influenced budget composition. Business politicians prioritized public investment expenditure and increased spending on infrastructure, roads and transport. They decreased spending on public consumption and transfers. The market-oriented policies translated into effects on economic outcomes. In the US states, for example, market-oriented policies of business politicians increased economic growth. Future research should examine how businesspeople in parliament influence economic policies and outcomes and employ survey experiments to investigate voters’ perceptions of business politicians.