Contemporary Debates: Assoc. Prof. Murat Koyuncu

The guest of the Contemporary Debates series organized by Kadir Has University Department of Economics will be Assoc. Prof. Murat Koyuncu (Boğaziçi University).

Dr. Koyuncu will discuss “From Elected to Appointed: The Economic Consequences of Local Authoritarian Takeovers”* at B-201 on Thursday, January 4th at 17:00.

* Joint work with Mustafa Kaba (Max Planck Institute) and Serkant Adıgüzel (Sabancı University).

Abstract: Replacement of locally elected officials with centrally appointed executives has been adopted as a political strategy in the recent global wave of democratic backsliding. This study reveals how such authoritarian takeovers of local jurisdictions adversely affect the rule of law and economic efficiency using the universe of state contracts in Turkey and a staggered Difference-in Differences (DiD) design. Notably, centrally appointed mayors use competitive auctions at a rate nearly half that of elected mayors. Instead, they favor extraordinary legal provisions that allow the use of noncompetitive procedures almost three times as often. This results in a 24% surge in contract prices and a 40% reduction in value for money, translating to a waste of 6% in overall procurement spending of affected municipalities. These findings are robust to various tests, including Regression Discontinuity (RD) estimation. Our exploration of underlying mechanisms points to diminished local accountability as a key driver, emphasizing the vital role of democracy for economic efficiency in the era of increasing autocratization.