Economic performance and political coordination in Portugal’s "dry" political system

Abstract

We posit that sound, growth-promoting economic policy is more likely to be formulated when major political players have incentives to cooperate. Using Portugal as an arena to test this theory, we provide an in depth analysis of its policymaking environment, finding that Portuguese institutional arrangements are what we term “dry.” That is, they are not well suited to provide incentives for cooperation among actors in the policymaking process. Portugal has had difficulty sustaining economic growth in the long term. Our arguments are supported with both contextual analyses and a statistical examination, in which we find a strong link between single-party majority government and positive economic and fiscal performance. These findings have broad implications for democratic economies across the world.