Abstract COVID-19 preceded electoral upsets in many countries, but did it cause them? Using both OLS and instrumental variable methods on granular electoral data we find that, in the case of Brazil, (i) both COVID-19 mortality and underlying cases played a significant role in reducing the incumbent candidate’s votes; (ii) the absolute COVID-19 electoral penalty was stronger in more closely competitive municipalities; (iii) COVID-19 lost its relative importance in more competitive municipalities to factors, such as economic growth, electoral mobilization, inequality, as well as education and employment structure. As a result, while a typical voter at the national level may have been more interested in the healthcare costs of the COVID-19 pandemic, their electoral focus shifted to the economy in more competitive municipalities. This is a novel result on the electability of incumbent populists, implying changing perceptions of political competence when elections become more competitive. This result helps explain re-election strategies of incumbent populists who tend to downplay failures in managing the COVID-19 healthcare crisis and emphasize the state of the economy. Our results imply that populists can indeed boost their re-election chances if they exploit this political trade-off.

Abstract It is acknowledged that Asia’s remarkable economic achievements of the past 50 years build on institutional arrangements very different from the West, including the central role of business groups (BGs) as an organisational form. As the Asian economies move from extensive to intensive growth, we enquire whether the BG format will be as effective going forward, especially with respect to innovation. We argue that the ubiquity of BGs in Asia has been associated with the accretion of significant market power, as well as high overall concentration in the economy as a whole. Our empirical work draws on a sample of more than 9000 Asian firms across seven countries. We find that, unsurprisingly, given their access to additional resources, BGs are more innovative than non-affiliates. However we also find that the wider consequences of the BG form for innovation may be negative.

We explore the distribution of public–private partnerships (PPPs) among the European Union countries, with a special focus on fiscal rules and budgetary constraints while controlling for empirically identified drivers. While offering the opportunity to increase innovation and efficiency in the public sector infrastructure, PPPs allow governments to relax their budget and borrowing constraints. We find that the state of public finances influences the government’s choice of PPPs and makes them more appealing for reasons other than efficiency. Stringent numerical rules on the budget balance also foster government’s opportunism in the choice of PPPs. On the other hand, high levels of public debt increase the country risk, and discourage private investors from PPP contracts. The results highlight the importance of restoring PPP investment choices based on efficiency criteria and adapt fiscal rules to shield public investment while stabilizing private expectations by means of credible trajectories of debt reduction. The findings contribute to the debate on the role of fiscal rules in fiscal policy and of PPPs in infrastructure financing.