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21 Const. Pol. Econ. 1 (2010)

handle is hein.journals/constpe21 and id is 1 raw text is: Const Polit Econ (2010) 21:1-27 DOI 10.1007/s10602-008-9062-4 The political economy of constitutional choice: a study of the 2005 Kenyan constitutional referendum Mwangi S. Kimenyi - William F. Shughart II Published online: 11 October 2008 © Springer Science+Business Media, LLC 2008 Abstract Recent studies of the linkages between the wealth of nations and the institutions of governance suggest that concentrating political power in a monarchy or a ruling coalition impedes economic growth and, moreover, that while power-dif- fusing reforms can enhance the wellbeing of society in general, opposition by groups benefiting from the status quo is predictable. In November 2005, Kenyans rejected a proposed constitution that, despite promises made by their new chief executive, would not have lessened the powers of the presidency. Using a unique, constituency-level dataset on the referendum vote, we estimate a model of the demand for power diffusion and find that ethnic groups' voting decisions are influenced by their expected gains and losses from constitutional change. The results also highlight the importance of ethnic divisions in hindering the power-diffusion process, and thus establish a channel through which ethnic fragmentation adversely impacts economic development. Keywords Constitutions Direct democracy - Public goods - Interest groups Ethnic divisions JEL Classifications D72 H4 - H77 - 012 1 Introduction One of the most significant advances in the economics literature during the past few decades has been to place political and economic institutions at center stage in M. S. Kimenyi Department of Economics, The University of Connecticut, Storrs, CT 06269, USA W. F. Shughart II (E) Department of Economics, The University of Mississippi, University, MS 38677, USA e-mail: shughart@olemiss.edu I_ Springer

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