New study to investigate the impact of political donations

How businesses benefit from campaign donations will be explored in new research from the University of Essex, which will look at the links between donations, business growth, and political influence across time.

Dr Nelson Ruiz, Leverhulme Trust Early Career Fellow at the Department of Government at Essex, will look to discover just how influential donors can be thanks to funding from the Leverhulme Trust.

Dr Ruiz will explore the question of whether these donations are one-offs that lead to marginal benefits for donors, or whether these practices result in growth and increased market power for donors over time.

Dr Ruiz said: “In the project, I explore whether long-term company growth is related to campaign contributions. Campaign contributions facilitate access to public contracts, which could lead to firms that donate to successful candidates growing more compared to donors of losing candidates. Ultimately this project aims to study whether success in the ‘free’ market can be conditioned by political connections.”

Money in politics is a widespread phenomenon; almost all democracies across the world allow firms to make contributions to political campaigns. However, a big challenge when studying whether firms grow as a result of their campaign donations, is obtaining reliable data over time, both on the economic performance of firms and their campaign contributions.

Dr Ruiz will base his research on Colombia, which provides a unique testing ground as the country adopted transparency laws in 2011. This will allow the project to link campaign donations, government contracts and tax declarations across 10 years. This data will also enable the researchers to establish whether company growth is larger after donations to successful politicians, compared to donating to losing candidates.

The three-year project will collect and compile novel data, tracing companies’ political donations, the award of government contracts, and tax declarations over ten years and will explore whether success in the ‘free’ market is conditional on political connections supported by campaign contributions.