Why do governments sometimes pursue economic liberalization policies that contradict their constituents’ short-term interests and threaten the party’s success in upcoming elections? This question drives my exploration of how politicians evaluate economic policies in the context of their own reelection to office. Globalization theory suggests that international economic pressures outweigh domestic political concerns, forcing political leaders to comply with western economic goals. Using cross-national comparisons I show that politicians retain substantial control over economic policy decisions, and that international pressures do not explain policies that appear at odds with electoral incentives. I further demonstrate that domestic political conditions can encourage politicians to evaluate economic policies from the perspective of long-term electoral competitiveness. I argue that domestic variables such as contradictory demands from constituents, a lack of party rivals and organizational structures that promote party discipline and unity facilitate a long-term perspective for policy making. These variables can lengthen the time horizons of politicians, enabling them to overcome short-term goals of reelection and vote-maximization to focus instead on long-term policies that help them compete in future elections. Four substantive chapters examine the international and domestic policy-making arena and explore the pressures on politicians that promote long-term economic policy-making. The concluding chapter explores my findings in a broad, comparative context.

The International Economic Community (draft available)

To what extent does the international economy persuade policy makers to reform? Globalization theory suggests that international pressures constrain domestic politicians to implement liberal economic policies, thus providing an explanation for why leaders compromise their own goal of reelection in designing economic reforms. However, I find that globalization theories underestimate the policy-making independence of domestic leaders. Cross-national policy outcomes and in-depth studies of policy making in Central Europe show that politicians retain autonomy over policy decisions even in a global economic environment. I investigate how different political goals shape leaders’ leaders’ perceptions of the benefits associated with fulfilling international economic expectations. Globalization and international expectations do not provide a convincing answer to the question of why politicians choose policies that contradict their ideological orientation or undermine their relationship with key constituencies. In the next chapters, I argue that domestic level conditions better explain economic policy choices.

Long-term Electoral Strategies (draft available)

How do political leaders weigh conflicting constituent demands and their own reelection when designing economic policy? Most of the literature explaining economic policy choices relies on the assumption that politicians want to maximize votes to win reelection. As a result, we expect economic policy decisions to reflect their short-term reelection goals by benefiting core constituent groups. However, in some cases, politicians implement policies that undermine the interests of important support groups, and thus endanger their own reelection. This chapter constructs an alternative explanation of policy choices that endogenizes the time horizons of political leaders. I argue that specific conditions cause politicians to weigh the costs and benefits of policies over time, which leads some governments to implement policies that maximize social welfare in the long run. Politicians with long time horizons consider policies as instruments for promoting long-term electoral goals. Irreconcilable constituent demands, the absence of party rivals and competing constituent groups can lengthen the time horizons of politicians and create incentives for choosing policies that increase social welfare in the long run. Moreover, politicians choose policies that maximize social welfare when they view reputation as a vital component of future electoral success. Interviews with Hungarian Socialist Party politicians highlight the trade-off between short-term reelection and economic reform. In choosing the latter, these politicians expected to build their long-term competitive advantage with both traditional left-wing voters as well as with pro-market voters. Long time horizons encourage politicians to choose policies with positive long-term effects for society.

Electoral System and Party Discipline (draft available)

When do politicians have long time horizons? I argue that discipline among parliamentary deputies promotes long time horizons by ensuring party support for unpopular government policies. I explore the effects of electoral rules, candidate nomination processes and party organizational structure on party discipline. Even when an electoral system promotes constituent service, party organization and candidate nomination processes can create party discipline. Testing hypotheses on Hungary’s mixed electoral system, I show that parties can create internal structures that enhance party discipline, overcoming the incentives of the electoral system. Party discipline further highlights the importance of party reputation for the fulfillment of long-term party goals. I evaluate the relationship between party discipline and electoral rules using a dataset of parliamentary voting for the 1994-1998 term in Hungary developed from government sources.

Internal Party Dynamics and Party Unity (draft available)

How do the internal dynamics of party politics and the policy preferences of the party rank and file influence the time horizons of party leaders? This chapter debunks the common assumption that party activists prefer policies are that ideologically "pure", whereas leaders prefer moderate vote-maximizing policies. Despite the variety of ideological orientations represented in the party, activists and leaders in the Hungarian Socialist Party share policy preferences and are unified regarding long-term party goals. In part, this reflects the high level of exchange and interaction between different types of party members. Also, internal party solidarity reflects structural incentives to place party reputation and long-term survival over any ideological agenda. Mechanisms for solidarity extend the time horizons of party leaders, enhancing their ability to implement liberal reforms. This chapter uses evidence from interviews and surveys documenting party members’ self-placement on policy issues, policy priorities for the government, and preferences for economic reforms.

Conclusions and Comparative Cases (draft available October 1999)

Domestic politics form the decisive context for economic liberalization. The domestic political context provides incentives for overcoming short-term electoral incentives in favor of long-term policies benefiting society. The contribution of this dissertation is in linking political leaders’ calculation of the costs and benefits associated with liberal economic reform to the domestic political context of policy making. How does the case of the Hungarian Socialist Party compare to the policy choices of other governments in economic transition? In this chapter I extend my analysis to a variety of cases of governments faced with choices over economic policy, including Poland, Spain, Argentina and Columbia. I explore how politicians weigh short-term vote maximization and long-term electoral strategies in each case. Not all cases support the conclusions based on the Hungarian case, that politicians with sufficiently long time horizons will choose policies that promote their long-term electoral position. However, each provides further insight into how politicians choose between long-term goals and policies aimed at immediate reelection. The findings of this chapter lay the groundwork for future research on policy-making that endogenizes the time horizons of politicians.