Does Franchise Extension Reduce Short-run Economic Growth? Evidence from New South Wales, 1862-1882
Abstract: Empirical studies have established that franchise extension has positive effects on long-run growth because democratisation leads to greater equality of access to resources. However, in the short-run franchise may lead to a redistribution of resources away from important sectors of an economy. This paper examines this proposition by considering the case of land reform in the colony of New South Wales between 1862 and 1882. Reform was a direct result of franchise extension in preceding years that attempted to reallocate land away from the wool sector to small agriculturalists. Wool producers tried to avoid redistribution of their holdings by expending resources on evading reform legislation. These were resources that could have been invested in productive activities and therefore, it is expected that franchise reduced short-run growth because of the institutional changes it induced. The results presented here confirm that evasion efforts acted to reduce both pastoral sector and total GDP in the short-run.