Authors

Viktoriia Poltoratskaia¹;  ¹ Central European University, Austria

Discussion

Why do private companies support authoritarian ruling parties? Business and politics in non-democratic systems have complex dynamics. Some argue it's a mutual benefit, while others see it as one-sided.

In competitive authoritarian states, businesses constantly renegotiate their relations with the government, often relying on the state. This results in a reduction of economic diversity, aligning business interests with the ruling elite (Sallai & Schnyder, 2021). On the one hand, in Turkey, the AKP party consolidated business support by politicizing the bureaucracy and weakening legal oversight to direct resources to supporters and control dissent (Esen & Gumuscu, 2018). On the other hand, businesses might collaborate with autocratic regimes for self-interest, especially when the state's economy is rent-seeking. Collusive ties with local governments, as seen in China, can favor business interests (Huang & Chen, 2020).

Two views emerge: businesses support to secure their positions or to gain economic advantages. This study explores United Russia party donors to decipher the nature of financial support of the dominant party. It aims to determine if private companies support the party for economic gain or self-preservation in a neopatrimonial state (Shkel 2019, Gel'man 2016). 

This article suggests that the mechanism of the party's financial inflow through donations from private companies has its routes in corrupt exchange, when companies are allowed to get access to public money through public procurement contracts in exchange for financial support to the party. While Zhuravskaya&Mironov (2016) showed that public procurement money is basically used as a source of cash for politicians before elections, this study analyzes the more formal exchange, where on the contrary companies get a kickback in the form of public procurement contracts for becoming donors.

This article uses a event studies design in order to identify the influence of donations to the United Russia party on the number and the amount of public contracts that a company has received. The results suggest that the treatment (donation to the ruling party) significantly determines the amount and number of public contracts received by the firm. The amount of the contract is likely to be 71.26% lower two years prior to the treatment, holding other variables constant and using the year prior to the treatment as the reference year. 

This could suggest that both the party and the company are strategic in their relationship. While the party used the company's financial support very instrumentally when it was needed, the company didn't support the party for free, but actually got something in return.