In 2010, Besley, Persson, and Sturm published a paper entitled Political Competition, Policy and Growth: Theory and Evidence from the US in the Review of Economic Studies, one of the top economic journals. The paper provides empirical evidence of a strong link between low political competition and low income growth.
The logic of this association is straightforward. Political parties prefer special-interest policies, while voters have an interest in economic growth policies. When there is sufficient political competition, swing voters are able to gain electoral influence; without such political competition, parties are unconstrained to focus on the special-interest policies.
The authors look at variation in the political competitiveness across U.S. states and time to see how it relates to economic policies and economic performance. They find robust evidence that political competitiveness improves policy: “A consistent picture emerges. Higher political competition is associated with a change in the policy mix towards policies that are widely believed to be pro-business and growth promoting,” such as lower tax revenue share, higher infrastructure spending, and the presence of right-to-work laws.
And the authors also find robust evidence that political competition is strongly associated with higher rates of economic growth. Using data of state incomes, the authors find that across time periods going back even to the 1880s, more political competition is associated with higher income growth. In summary, they write that “Taken together, our results provide robust evidence that political competition benefited economic development by inducing parties to pursue growth-promoting policies rather than their private agenda.”
There are many benefits of political competition, which can potentially help improve political discourse and reduce affective polarization. It’s worth remembering that more political competition would likely make us wealthier as well.