Ministers and the Goldilocks Effect: Presidential Stakes, Performance Extremes, and Cabinet Volatility in Ecuador Corresponding author: John Polga-Hecimovich Department of Political Science University of Pittsburgh 4600 Wesley W. Posvar Hall Pittsburgh, PA 15260 Telephone: 412-648-7250 Fax: 412-648-7277 jop42@pitt.edu Santiago Basabe-Serrano FLACSO Ecuador sbasabe@flacso.org.ec Andrés Mejía Acosta King’s College, International Development Institute a.mejia@ids.ac.uk Abstract According to established wisdom, cabinet turnover under presidentialism is driven by weaknesses in individual performance, changes in legislative coalitions, and exogenous shocks from the political and economic arenas. However, empirical evidence from democratic Ecuador seems to contradict this accepted wisdom, with turnover remaining high over time despite variation in legislative composition, government status, economic conditions, and even constitutional rules. We propose that differences in ministers’ duration over time is in part a function of the level of stakes of the principal-agent relationships between presidents and ministers, with higher political uncertainty resulting in a ‘Goldilocks Effect’ where both poor and exceptional ministerial performance are sanctioned as threats. We find cautious empirical support for this theory in a series of hazard and event count models using over thirty years (1979-2012) of original ministerial data from Ecuador. Keywords: Presidential cabinets, ministers, Ecuador, institutional instability 2 On January 12, 2012, Ecuadorian Minister of Health David Chiriboga resigned after visiting the Baca Ortiz Children’s Hospital in Quito with President Rafael Correa. Patients complained of long waits and a lack of available doctors throughout the political visit, but the nadir came when Nayelli Naranjo, a six year old girl, fell down an open elevator shaft ("Correa confirma renuncia de Chiriboga al Ministerio de Salud" 2012). After two largely ineffective years in the position, Chiriboga presented his resignation that afternoon at the request of the president. This change came just two months after the resignation of Coordinating Minister of Production, Employment, and Competitiveness Nathalie Cely on November 10, 2011. Cely, a Harvard graduate and doctoral candidate in Development Economics at FLACSO-Quito, presented quite a distinct public image from Chiriboga. In fact, she was publically lauded on numerous occasions by the president as an “examplary” ("Gabinete a imagen y semejanza" 2010) and “influential” (Enríquez 2011) minister. Further, as an economics expert within the government, she wielded an enormous amount of influence. Nonetheless, after merely a year and a half in her position, she was removed by President Correa and then named Ambassador to the U.S. In this paper, we argue that these two cases of ministerial removal are not as different as they seem. Instead, each removal acted as a bulwark protecting a president anxious to retain a high level of power. In the first scenario, an incompetent minister proved to be a public risk to the president’s image and was promptly replaced. In the second, a highly competent, visible, and ambitious minister was transferred out of her position and appointed to an important post removed from the domestic political game. From a broader perspective, these cases illustrate that as the stakes of the principal-agent 3 game grow for presidents (i.e. where drift or failure may result in increasingly deleterious consequences for the president), ministerial removal will increase—especially at performance extremes. Nonetheless, this “Goldilocks Effect” of low- and high- performance ministers being removed as uncertainty grows is at odds with some of the accepted wisdom regarding cabinet turnover in presidential systems. Established theory says that cabinet designation in multiparty minority governments is a common way of consolidating government coalitions under presidentialism (Amorim Neto 1998; Altman 2000; Mejía Acosta 2009a; Alemán and Calvo 2010; Martínez-Gallardo 2012), implying that changes in the government coalition are likely to be accompanied by changes in the executive cabinet. Cabinet appointments are also seen as an essential tool that presidents use to overcome the challenges of governing, such as economic crisis or scandal (Martínez-Gallardo 2005). Other literature focuses on individual characteristics, such as cabinet ministers’ education and experience (Berlinski et al. 2007), expertise (Huber and Martinez-Gallardo 2008), and ambitions (Nicholls 1991) as the key factors in determining tenure. Yet, none of these accounts appears to adequately explain cabinet turnover over time in Ecuador. Ministerial turnover has remained high between 1979 and 2012 despite variation in legislative composition, government status, and economic conditions. The motivating questions are thus: how applicable is the conventional wisdom regarding ministerial change, and what factors explain sustained patterns of ministerial duration from country to country? We propose that presidential instability—or the specter of instability—makes a president more likely to use strategic removal in order to limit incompetence or threats from within his or her own cabinet. It is the size and likelihood of potential loss for the 4 president, then, that drives the rate of ministerial turnover. In stable political environments like the U.S. or Chile, agency loss may result in poor policy and a decrease in presidential approval, while in political unstable environments like Ecuador, in which no elected president finished their term between 1996 and 2006, all types of ministers may pose direct or indirect threats to presidential permanence. The long history of presidential instability and uncertainty in Ecuador may therefore be one reason why the country has maintained the lowest ministerial duration rates in Latin America since World War II (Suárez 1982). Here we empirically test our theory of ministerial duration as well as a number of the accepted reasons for ministerial turnover on an original database of every Ecuadorian cabinet minister between 1979 and 2012. In order to test a range of parameters, these data are structured both as discrete-time data, which allow for analysis with time-varying independent variables, as well as continuous data, permitting the application of a hazard model. We find a paucity of statistically significant variables for many of the conventional explanations, but some support for the theory that government risk and imminent elections do indeed have a positive impact on cabinet volatility. We then return to the phenomenon of presidential instability to better explain this change, and suggest that this should be tested on cross-national data. The paper proceeds as follows. In the first section we review the conventional wisdom regarding cabinet turnover, emphasizing the role of cabinet change in presidentialism. In section two, we explore relevant theories, focusing on those most relevant to Ecuador’s brand of presidentialism, and develop our own theory of ministerial volatility. The third section analyzes the Ecuadorian case, establishing the descriptive 5 parameters from 1979-2012 and showing the rise of cabinet reshuffling under President Correa. We then test this proposition in section four using monthly cabinet data from 1979 to 2012 using duration modeling and a series of event count models. The fifth section concludes. 1. The Study of Presidential Cabinets The study of presidential cabinets, and specifically ministerial turnover, is a subfield of Political Science that has generated great interest in parliamentary systems (Browne et al. 1984; Strøm et al. 1988; King et al. 1990; Laver and Shepsle 1990; Diermeier and Stevenson 1999), but far less under presidentialism (notable exceptions include Amorim Neto 1998; Martínez-Gallardo 2005; Camerlo 2012). This is not a minor oversight. Cabinet stability, or lack thereof, can be indicative of the stability of public policies and governments’ short- or long-term policy visions and the capacity of governments to carry out their policy visions, since great volatility may impede policy continuity. High turnover can create vacuums in which newcomers have little experience or expertise in the bureaucracy of which they are in charge (Chang et al. 2001), while excessively long ministerial tenures may be indicative of executive intransigence, patronage, or nepotism. In general, when there is uncertainty about whether a politician will be in office in the next period, politicians do not fully internalize the costs associated with their policy choices (Persson and Tabellini 2002) and they are unable to commit credibly to intertemporal arrangements. In terms of cabinet politics in particular, a certain degree of stability is also necessary to promote long-term policies and, importantly, to see the implementation of programs and policy through to completion. Frequent turnover 6 promotes shortsightedness in policymaking and favors outcomes that have short-term benefits, regardless of how costly they might be in the longer run, since their costs will not be borne by current decision makers. Volatility is also a measuring stick of government stability itself in the eyes of the public and especially the legislature, in which excessively high (or low) turnover rates may show a lack of policy direction. Rapid turnover may be associated with weak governments that bow to external pressure to change policy, or are simply unable to implement policy. In this same vein, cabinet control by the president can be interpreted as a type of signaling game to the legislature and the public about the direction of policy, willingness to negotiate or collaborate with opposition parties, or simply as a way to acknowledge a previous policy misstep. As Nelson Polsby says, “When a new president picks his cabinet, he gives observers the first set of solid clues about the kind of president he intends to be” (Polsby 1978: 15). For example, removal of a single visible minister or even wholesale cabinet changes could be a signal of executive strength or policy change. Or perhaps, given carrying interpretations of the signals based on context and history, a more useful signal (although not necessarily a true one) could be sent by not removing ministers. In either case, cabinet appointments serve both implicit and explicit policy purposes. 2. Ministerial Turnover and Presidential Stakes What explains variation in the rate of cabinet appointments across administrations and countries? Accepted theories focus on a range of factors, from administration-specific, to individual characteristics and qualifications, to exogenous political and economic 7 impacts. One prominent explanation ties cabinet stability under presidentialism to the stability of government coalitions. Cabinet designation in multiparty minority governments is a common way of consolidating government coalitions (Amorim Neto 1998; Altman 2000; Amorim Neto 2002; Mejía Acosta 2009a), which implies that changes in the government coalition are likely to be accompanied by changes in the executive cabinet.i This is especially true of the so-called “political” ministries, as opposed to the largely economic “technical” ones (Strøm 1990; Conaghan 1995; Amorim Neto 1998, 2002; Siavelis 2006). The political posts are those portfolios distributed by the president to forge or fortify legislative support, while technical ministries are generally protected from explicit legislative political pressure in order to guarantee policy agility and executive influence (Conaghan 1995). A second theory views cabinet appointments as an essential tool that presidents use to overcome the challenges of governing, such as economic crisis or scandal (Martínez-Gallardo 2005). According to this theory, variation in cabinet stability largely depends on the electoral calendar and presidents’ relative institutional and political strength. To begin with, presidents are more likely to use appointments to deal with shocks as elections draw closer, so it predicts higher cabinet instability as elections approach. Secondly, and contrary to the first theory, the greater the relative strength of presidents, the more likely they will rely on cabinet changes to manage crisis. Consequently, this theory implies that coalition governments should be more stable than single-party governments.ii Other literature focuses on individual characteristics, such as cabinet ministers’ education and experience (Berlinski et al. 2007), expertise (Huber and Martinez-Gallardo 8 2008; Dewan and Myatt 2010), and ambitions (Nicholls 1991) as the key factors in determining tenure. Ministers who enjoy a higher level of education and experience are should be less likely to commit errors that require sanctioning by the political principal than their less experienced or educated counterparts. The empirics bear this out in some circumstances. For example, in an empirical analysis of parliamentary ministers in Europe, Berlinski, et al. (2007) find that educational background increases ministers’ capacity to survive, and that older ministers and more experienced ministers have higher hazard rates than newly appointed ministers. The same logic holds for expertise in the portfolio area: regardless of age, education, or experience, the more knowledgeable a minister in his or her area, the longer he or she should survive. Removal therefore functions both as a direct tool and as a signal. To wit, Dewan and Myatt (2010) assume that any type of government requires high performance by talented ministers. Removal—or threat of removal—is therefore a mechanism of control to rid presidents of underperforming ministers and serve as a signal to ministers who gain too much autonomy. Lastly, ambitious ministers may pursue private ambitions rather than the objectives of the government. This can result in simple policy loss or drift, favoring, for example, the business sector in the U.S. (Nicholls 1991). However, in contexts of low presidential stability, it is possible that this threat is more insidious and that a capable and ambitious minister may actually pose a threat to the president’s power. Presidential Stakes and the Goldilocks’ Effect In the children’s fairy tale of the same name, Goldilocks enters the house of three bears and finds successive amenities (e.g. porridge, beds) too extreme in one direction or the 9 other before settling on one that is “just right”. As applied to the social or natural sciences, the Goldilocks Effect refers to the phenomenon failing at extreme conditions, but thriving in the middle. Along these lines, we propose that enduring ministers in environments of high institutional instability are those that comply with the Goldilocks’ Principle: they fall within a certain margin of compliance and capability without reaching negative (incompetence) or positive (extreme capability) extremes. We theorize that ministers at these performance extremes exacerbate the principal-agent problem inherent in the delegation of power, especially as presidential risk rises. A powerful minister can overshadow the president and threaten party leadership in the president’s scheduled or premature succession. A president rationally attempts to carry out useful policies, or at least maximize his or her own electoral prospects through policy. He or she can achieve this in part by surrounding herself with capable ministers (Dewan and Myatt 2010). This, of course, creates the possibility of an agency problem: ministers may choose to pursue individual ambitions instead of presidential goals. The solution to this problem is clear. In the private sector, the principal could manipulate the agent’s financial compensation to create incentives for compliance with the president’s objectives; however, this is not feasible in the public sector. Instead, the president can exercise control by removing or rotating that minister. Cabinet reshuffling, then, is a useful instrument in tempering ministerial ambition and threats to the president’s power. Notably, Indriđason and Kam’s (Kam and Indriđason 2005; Indriđason and Kam 2008) theory of cabinet reshuffles in parliamentary systems emphasize that it is a tool used to retain power in the face of both intraparty and electoral challenges. According to their theory, the more vulnerable a Prime Minister 10 (PM) is to an internal leadership challenge or electoral defeat, the greater the incentives to reshuffle her cabinet. Although we agree with Indriđason and Kam’s basic logic, it is important to note that cabinet reshuffles under parliamentarism involve re-distributing cabinet portfolios to other members of the same coalition parties, and not merely the transfer of ministers from one ministry to another. Nonetheless, the underlying reasoning remains: presidents want to remain in power (both de jure and de facto), and cabinet reshuffles allow them to maintain the expertise and loyalty of trusted ministers while undercutting those ministers’ power. Our twist to this explanation is that both cross-national and longitudinal variation can be explained by examining the expected utility of agency loss. In situations or systems where presidential survival is guaranteed and the impact of agency loss is limited to the policy arena, ministerial turnover is likely to be blunted. However, in other situations, agency loss may ultimately result in threats to the president’s survival, through threats from the population or the legislature (as a result of policy mistakes, in the case of a poorly performing minister) or through threats from the cabinet (as a result of strong ministers who may pose a direct threat to presidential power). Ultimately, the same level of ministerial competence or ministerial threat should then produce different outcomes under different institutional environments, meaning the range of behavior that leads to turnover grows as presidential stability decreases. This range of permanence is depicted in Figure 1. In a stable political environment, a broad range of competence or threat posed by ministers is tolerated, since the consequences of their actions are more limited. In unstable environments where presidential stability is not guaranteed, as in the bottom part of Figure 1, the survival 11 range decreases. The same minister that might survive in the stable political environment will not survive in this unstable one. This distinction is important, because it acknowledges the validity of commonly accepted causes of minister termination, such as individual performance or a shakeup in the wake of an exogenous shock, while offering an explanation for broad cross-national or administration-to-administration differences. As the figure shows, incompetent ministers are less tolerated under both circumstances than potentially challenging “strong” ministers. In other words, all things equal, a president prefers a potentially threatening competent ministers to a potentially threatening incompetent minister. [Figure 1 about here] In other words, ministerial volatility is a function of the stakes of the principalagent relationship, in conjunction with the competence of or threat posed by a president’s cabinet ministers. Sensibly, volatility is therefore a result of both presidential and ministerial characteristics. On one hand, an incompetent or highly threatening minister – the two extreme types— should be removed under any type of government for undermining the president’s objectives. On the other hand, this is conditioned on the potential consequences for the president. Focusing on this conditioning factor, we therefore propose that, H: An increase in presidential risk will cause a decrease in ministerial tenure. This hypothesis is similar to Martínez-Gallardo’s (2005) proposal that cabinet reshuffles are responses to exogenous shocks, such as economic or political crisis, yet there is a subtle and vital difference: we believe that managing the cabinet is not a response to crisis, but in anticipation of it. Further, there is no way to account for 12 pervasive, long-term cross-national differences in duration patterns under MartínezGallardo’s account. Taking into account political and presidential stability does this quite well. In sum, the conventional wisdom may do a good job of explaining cabinet ministers’ tenure, but these variables’ impacts are also conditional upon the country’s institutional stability (like country fixed effects) and the president’s perceived stability (administration fixed effects). So, how do these theories apply to Ecuador, a country with one of the highest rates of ministerial turnover in the world? 3. Cabinet Turnover and Reshuffling in Ecuador The rate of ministerial turnover in Ecuador has been consistently high dating from the 1940s. In a comparative analysis of executive power from 1940 to 1976, Suárez (1982) shows that Ecuador had the lowest average ministerial duration of the twenty Latin American countries included, at just 13.7 months per minister (compared to a regional average of 23 months and a high of 50.6 months in Paraguay). In part, this is due to the fact that Ecuador also exhibited the lowest level of presidential duration in the region in the same timeframe, with the average president lasting only 1.6 years, compared to a regional average of 2.7 years (Suárez 1982: 116). Still, it is notable that these patterns have not changed over time. If anything, the high rate of turnover in Ecuador has continued after the return to democracy in 1979. Comparing 12 Latin America countries’ cabinetsiii between 1990 and 2000, Martínez Gallardo (2005) shows that the most unstable cabinets were the five Andean countries (Bolivia, Colombia, Ecuador, Peru, and Venezuela) while the most stable cabinet came from more institutionally stable polities (Chile, Costa Rica, Uruguay, and to 13 a lesser degree Argentina and Mexico). According to these data, the cabinet turnover rate in Ecuador was among the highest in the region: it had the second-highest number of total ministers, the second-highest number of total changes, the second-lowest average tenure length, the second-lowest overall portfolio stability, the fourth-lowest average tenure as a proportion of the total presidential term, and the highest proportion of turnover due to termination and not reshuffling (Martínez-Gallardo 2005: 83-85, 178). Our own data, which covers the full period of time from re-democratization in 1979 to January 2013, reveal even higher rates of ministerial volatility as those described by Martínez-Gallardo.iv These data were collected independently from publicly available records, presidential decrees, and then corroborated with newspaper reports and the excellent ministry-by-ministry breakdowns provided in Rivera Molina (2006: 505-518). They reveal 451 departed ministers in 29 different cabinet offices in 12 administrations. As shown in Table 1, the overall average duration of a minister is approximately 386 days, less than 40% of Martínez-Gallardo’s regional average of 991 days. The mean duration is a little over thirteen months per minister, with a model category of merely 150-200 days and a heavily right-skewed distribution. During this time, only seven Ecuadorian ministers managed to last a full presidential term of four years, and all seven served under the Borja (1988-1992) or Durán-Ballén (1992-1996) administrations.v [Table 1 about here] As illustrated by previous research (Burbano de Lara and Rowland 1998; Mejía Acosta 2009b), average duration is likely to vary by administration, constitutional periods, and type of cabinet ministry. Not surprisingly, the average shortest-lived ministers come from administrations that were interrupted by death of the president 14 (Jaime Roldós), presidential oustings (Abdalá Bucaram, Jamil Mahuad, Lucio Gutiérrez) or that resulted from an interim government (Alfredo Palacio).vi When aggregated by the constitutional period, the administrations corresponding to the 1978 Constitution (19781998) had a cabinet duration of 443 days. The cabinet ministers serving during the next period under the 1998 Constitution (1998-2008) lasted an average of 337 days. The increased volatility in this second period is in fact paradoxical given that the 1998 constitution which was meant to bring improved governance, by protecting (among other things) cabinet ministers from legislative challenges in the form of impeachments. Finally, the cabinet members serving during the Correa administration have lasted an average of nearly 366 days. The data also show significant variation in duration according to exit patterns. As illustrated in Table 1, 39% (177 of 451) of the cases end their mandate due to exogenous factors that are outside direct political motivations (death of incumbent, end of elected period, or end of interim period). Another 47% (212 of 451) of cases are the result of direct resignations from ministers or removals by the president. While most resignations are nominally explained as “personal reasons”, in practice it is quite challenging to determine the real cause behind the resignation. For example, ministers would have been asked to resign by the president if their exit contributes to a broader coalition formation strategy, or the president is trying to pre-empt an imminent scandal. [Table 2 about here] This high level of turnover in Ecuador before the Correa government is a logical extension of the conventional wisdom tying coalition formation and maintenance to the distribution of cabinet portfolios. From 1979 to 2006, Ecuadorian presidents largely 15 relied on coalitions to govern (Burbano de Lara and Rowland 1998; Mejía Acosta 2009a; Mejía Acosta and Polga-Hecimovich 2011), in large part because no president ever held a single-party majority in the National Congress. Pro-government majorities were formed in 15 of 23 congressional elections between 1979 and 2002 and there were at least four more majority coalitions formed under the Gutiérrez and Palacio administrations from 2003 to 2006 (Mejía Acosta and Polga-Hecimovich 2011). One of the primary bargaining chips in negotiating these legislative agreements was cabinet appointments. Yet given the negative public perception of being allied to the government—the origin of the pejorative term “gobiernista”—parties often preferred to negotiate clandestine legislative agreements known as “ghost coalitions” in lieu of public ones (Mills 1984; Mejía Acosta 2009a). As a result, most cabinet officials were officially unaffiliated with any political party, and Ecuador was the Latin American country with the lowest percentage of partisan cabinets (Amorim Neto 1998). This explanation also loses traction in explaining turnover after 2008. Under the 2008 Constitution, President Correa’s Alianza País earned a near single-party legislative majority in the new National Assembly, with 59 out of 124 possible seats, and snared an additional four “unaligned” legislators. As of January 2013, Correa had ruled for a total of six years, the longest tenure of any president in the past century. He has enjoyed close to a government majority during this time, record-high petroleum prices helping to fill government coffers, and sustained high public approval. Under these circumstances, the expectation would be for ministers to endure longer than average, or at least the average from the legislative-dominated 1979-2006 era. However, referring back to Table 1, the 16 mean duration for cabinet ministers under Correa is 413 days, shorter than the regional average, but slightly longer than the historical average in post-Third Wave Ecuador. Censored data Still, none of these data take into account censored cases, where presidential duration may prejudice the “natural” duration of ministers. As the literature describes, ministers almost never endure from one administration to the next (Amorim Neto 1998; MartínezGallardo 2005).vii This is especially important to consider in Ecuador, where all three presidents elected from 1996 to 2006 failed to finish their terms, and none of their caretaker presidents lasted more than three years in office. As a result, it would be impossible, for example, for Bucaram’s ministers to exceed 184 days because Bucaram himself left office after only 184 days in office. Correa, meanwhile, has endured nearly six years in power. We plot a bar chart of the monthly turnover from 1979 to January 2013 in Figure 2, where the vertical tick marks and reference lines denote presidential change (either through elections or non-constitutional means). The results show that the longer duration of Correa’s ministers is in part a function of the increased term length, with absolute volatility remaining high. Despite the creation and inclusion of new ministries in 2009, the Correa period shows consistent turnover from month to month, and reaches a maximum of 13 in April 2010, as denoted by the high mark three-quarters of the way into the period. [Figure 2 about here] 17 Plotting the “natural” duration rates of ministers by administration reinforces these previous conclusions. A Kaplan-Meier survival function estimates the hazard rate while taking censored data into account (e.g. the government ends before the minister’s fate is observed, the minister dies, etc.). When no truncation or censoring occurs, the Kaplan–Meier curve is equivalent to the empirical distribution function. On the plot in Figure 3, the small vertical tick-marks indicate losses, where a minister’s survival time has been right-censored. Disaggregated by administration, it is clear that ministerial duration under Correa’s government is close to the historical mean. Comparing the rate at 500 days of government, Correa’s ministers have a 40% chance of survival, around the same rate as previous administrations that lasted at least 500 days. A log-rank test of equality for each administration provides further evidence of the proportionality of the groups to the larger sample (i.e. whether or not the survival functions are approximately parallel). This allows us to compare the observed ministerial change in each administration to the predicted change, and evaluate which administrations were more or less volatile. As Table 3 shows, the Roldós was much more volatile than expected, with 14 non-censored ministerial changes against an expectation of fewer than six. By contrast, the following eight administrations— including two removed presidents and three interim presidents—were actually more stable than expected given the volatility of the whole sample. The remaining three presidents—Gutiérrez, Palacio, and Correa—then appear to have much less stable cabinets than expected. These data are confounding in a number of respects. First, it appears that constitutional changes do not map onto these patterns of ministerial instability clearly. Secondly, periods dependent on coalition government are both 18 volatile (Roldós, Gutiérrez) and relatively stable (Borja, Febres Cordero), while the noncoalition Correa government was relatively less stable. Lastly, there is no consistent pattern or increasing or decreasing stability over time. [Figure 3 and Table 3 about here] Applying the same Kaplan-Meier survival function and log-rank equality test to data disaggregated by ministry type reveal some clear results. We advance a rather simple but effective division in terms of cabinets in charge of technical regulation, political influence and service delivery. The first group is made of cabinet members elected on purely technical criteria or to serve in cabinets of strategic economic importance for the country (Finance, Energy, Production, Mines and Oil, etc.). By definition, these cabinet posts are not directly linked to partisan interests in the legislature but are rather isolated to produce decisive policy making (Conaghan and Malloy 1994; Mejía Acosta 2009b). In second place, the “political” ministries are cabinet posts that serve a direct strategic political function directly relevant to the president (Interior, Foreign Affairs, etc.). Generally these cabinets are the product of internal and strategic negotiations with other political allies. Thirdly, the “service delivery” (Education, Health, Social Development, Public Works) cabinets play an important political role because they can have direct electoral consequences. As shown in Figure 4, the ministers in the economic ministries last less time than their counterparts in political or social ministries, beginning to differentiate themselves about 200 days into their period. The log-rank test reveals 83 technical ministers resigned or were removed from office between 1979 and 2012 when “only” 59 were expected given the overall level of volatility. 19 [Figure 4 about here] 4. Data and Method: Testing Causes of Cabinet Change in Ecuador To test the explanations of presidential cabinet turnover, we use a data on all 479 Ecuadorian cabinet ministers from August 1979 to December 2012. To test the range of hypotheses, we create two databases: (1) a discrete time set that uses month (N=401) as the unit of analysis and allows the inclusion of time-varying independent variables, such as government stability/risk, (2) a continuous-time set with individual ministers as the unit of analysis (N=479), permitting tests of individual-level characteristics. In set (1), the dependent variable is monthly status of each cabinet minister, measured dichotomously (in office, removed) or categorically (in office, removed/resigned, transferred, exogenous removal). The dependent variable for set (2) is the duration of each individual in office in days, with a mean value of 386 days. We operationalize the principal independent variable, presidential risk, through a measure of government risk from the Political Risk Group’s International Country Risk Guide (ICRG). This monthly assessment, carried out from 1984 to the present, is a combination of the government’s ability to carry out its declared programs and its ability to stay in office. The rating is the sum of three subcomponents, each with a maximum score of four points and a minimum score of 0 points. A score of 4 points equates to the lowest risk and a score of 0 points to highest risk. The subcomponents are: 1) government unity, 2) legislative strength, and 3) popular support. The values here range from 4 to 11, with a mean of 6.72 (SD=1.57), and are once-lagged in the estimations to 20 account for a government reaction to perceived risk; descriptive statistics for all variables summarized in the appendix. We also include fixed effects for administration in the duration model, adding presidential dummies. These variables can help determine if ministers were more likely to leave under presidents who lasted a full term (Febres Cordero, Borja, Durán Ballén, Correa until the present) in comparison to those who were removed from power before ending their terms (Bucaram, Mahuad, Gutiérrez) or those who were caretakers (Hurtado, Alarcón, Noboa, Palacio). We can also observe the impacts of presidents who faced great uncertainty and survived (Hurtado) versus those who fell (Mahuad, Gutiérrez) and those who faced greater certainty and fell (Bucaram) and those who survived without any great threat to their survival (e.g. Borja). Other independent variables are included to test the validity of accepted theories. Approaching elections is operationalized in set (1) as a dummy variable that codes if the change took place within one year of a scheduled election. For testing the effect of coalition changes, we draw on data from Mills (1984), Burbano de Lara and Rowland (1998), Mejía Acosta (2006) and Mejía Acosta and Polga-Hecimovich (2011). This is a dummy for whether there was a change in legislative coalition that month. To test the effect of ministry type, we code a trichotomous variable “ministry type” for political, economic, or social ministry as described above. In the estimations, we then present three sets of dummy variables for the three values. We use a number of variables to test the effect of economic effects on turnover. Using data from the National Institute of Statistics and Census (INEC), we code for 1) the percentage difference between the estimated cost of the food basket and the minimum monthly salary, and 2) the monthly 21 average price of West Texas Intermediate (WTI) crude oil, Ecuador’s primary source of government revenue. We also include a dummy to code for any previous ministerial experience. Following the two changes of political constitution since 1998, we trichotomously code for the three political constitutions and then use dummy variables for each of them. To fill in any questions regarding the coalition change variable, we include continuous variables of percentage of presidential party seats in the assembly and share of coalition seats in the assembly. Likewise, “gender” is a dummy variable that accounts for the minister’s gender; and “initial appointment” is a dummy that shows if the minister is the first appointed under a given president. “Presidential change” is added to some of the discrete-time models to control for turnover due to administration change. Like ministerial threats, other theoretical links shown in the literature such as partisanship and education have been shown as predictors of turnover (Borrelli et al. 2012). Unfortunately, in many cases these ministers are officially unaffiliated “independents” in Ecuador, and their education history is not readily available, especially prior to the 2000s. Models Given our research question(s) and data structure, we utilize an event history approach to model the risk of ministerial exit in Ecuador. A basic OLS estimator would not only bias the statistical conclusions but produce nonsensical results: OLS does not easily accommodate covariates that change value over time, it assumes linearity in survival times that may not be realistic, it cannot distinguish censored from non-censored cases, 22 and since it is not based on maximum likelihood, it may return negative predicted duration values. An event history model overcomes these problems while explicitly modeling the dependent variable’s conditional failure rate. Further, given the nature of our theoretical expectations and independent variables, we use two different types of event history models: 1) discrete time event count modeling, and 2) continuous time hazard modeling. We need both sets of models because in order to test both individuallevel and time-varying characteristics, our dependent variable takes two forms: one that records the number of ministers removed per month, and a second that uses the amount of time elapsed before ministerial removal. The first set of estimations uses an even count model, specifically a negative binomial (NB) model. In this approach, the dependent variable is a count of events—in this case, number of minister removed—that are nonnegative integers, bounded at a lower limit of 0 and unbounded above. The specific model type depends on the ratio of dispersion of the dependent variable to the mean of that variable. Since they are not roughly equal, indicating overdispersion of the dependent variable, we discard the possibility of a Poisson regression and instead run an NB regression.viii In the latter case, we apply the Cox proportional hazards model with a Breslow method for handling ties. The Cox model is most appropriate because, unlike other hazard models, it is does not assume any specific duration dependency parameter. The model employs the Breslow method to handle ties, or coterminous events, which leaves the risk set unchanged and is one of the most commonly implemented methods for Cox models (Box-Steffensmeier and Jones 2004: 54). This model produces hazard ratios that can be interpreted as the hazard of experiencing an event in the baseline or “reference” 23 category; values between 0 and 1 indicate a smaller hazard than the baseline hazard, while values above 1 indicate a greater propensity to suffer failure. Results The results of the estimations (Tables 4 and 5) show mixed evidence for established theories of ministerial turnover in presidential systems, and cautious support for the role of government risk. The count models include the incidence rate ratios (IRR) for all estimations, which is the equivalent of log-odds ratios or the hazard ratios from the duration models. Model 1 in the event count estimations is a full estimation that maximizes the number of observations and uses absolute ministerial exit as the dependent variable. In it, lagged presidential risk is statistically significant and positive, indicating that a one unit increase in risk one month is associated with an increase of 1.16 ministers removed the following month (following the IRR value). There are other positive values. Following some of the conventional wisdom associated with the Ecuadorian case, a change in coalition is associated with a high level of ministerial turnover. More enigmatically, and contrary to theory, an increase in the price of oil is associated with an increase in minister turnover in the first three estimations. Model 2 includes a dummy for whether or not the presidential administration changed in a given month, and further includes the variable for the restriction on the family food basket. The first of these totally wipes out the effect of lagged risk, as well as that of coalitions. This is not surprising: a change in administration, which three times in the data was the product of increased government instability, is correlated to both coalition change and risk. When this risk is taken into account by changing the 24 dependent variable to only those changes that were due to removal or resignation (model 3), negating the utility of administration change, neither risk nor coalition change are significant. However, drawing a sub-sample from the Correa administration, which has not faced administration change or large-scale pacts between parties, provides some additional leverage for the role of government risk on ministerial change: the lagged value is nearly significant when all types of removal are taken into account (that is, resignations, removals, transfers, and interim minister changes) and reaches conventional levels of significance when considering only removals, resignations, and transfers.ix [Table 4 about here] As Table 5 shows, individual-level factors do not have a systematic effect on duration, while administration-level variables are a more intriguing. For example, election years cause a noticeable increase in ministerial change, as do specific administrations. Ministers from economic ministers can expect to last less time in their positions that there counterparts in political ministries; using the ratios from models 6 (without the constitutional dummies) and 7 (with these constitutional dummies), these ministers suffer around a 60% higher hazard rate. Likewise, ministers in their position one year before an election should expect even less stability: a 115-127% higher hazard than ministers serving in non-election years. The administration dummies also offer some interesting answers: many of these variables are significant in the two estimations shown in Table 5. However, almost all of these hazard rates are all between 0 and 1, indicating a lower probability of experiencing ministerial turnover under them then the reference category of President Roldós. That is, all else equal, a minister under any 25 president besides Roldós had a better chance at surviving. Yet, controlling for different constitutional rules in model 2, the Gutiérrez and Palacio administrations rise above 1 and become statistically significant, with ministers under these governments experiencing a hazard rate around 100% higher than Roldós’ ministers. [Table 5 about here] How does the accepted theory fare? The effect of approaching elections is supported in the Cox estimations—where it is operationalized as a dummy variable coding for exit in the year leading up to an election. There appears to be an important electoral period in the last year before presidential elections in which presidents aim to reposition their or their party’s support through strategic ministerial removals or transfers. Similarly, the type of ministerial post does appear to have a statistically significant impact when it concerns economic posts. Yet contrary to expectations, these technocratic positions appear to be more easily replaceable by the president—about 60% more than political posts. Ministers in social ministries, however, do not endure any shorter or longer than their counterparts. This may be linked to presidents’ trust: the political ministries represent “inner-circle” portfolios staffed by individuals the president trusts more, while economic ministries are more likely to be staffed by technocrats the presidents trusts less. The relationship between coalition change and turnover is only partially supported by the data. This confounds the empirical explanations proposed in Mejía Acosta, et al. (2009b) and others regarding ministerial change in Ecuador. Likewise, the effect of economic crisis on ministerial reshuffling does not find support from the economic variables in the models. Lastly, the impact of previous ministerial experience is not 26 supported by the statistical results. In other words, when presented with over 33 years of ministerial turnover in a highly volatile political environment, few of the conventional theories appear to hold water. The large magnitude and significant Gutiérrez and Palacio dummies in model 2 indicate that these unstable governments did rely on ministerial change more than other administrations in order to endure. The real concern should actually be the lack of variation in presidential stability with which to test removal: Ecuadorian presidential survival is among the most tenuous in Latin America, from pre-Third Wave leaders (Fitch 1977; Pyne 1977) to the present period (Mejía Acosta and Polga-Hecimovich 2011; Bowen 2012; Conaghan 2012). The best laboratory to test this proposal may be the entire universe of cases from stable, institutionalized democracies as well as uncertain, poorly institutionalized ones like Ecuador. Martínez-Gallardo’s description of ministerial stability in Mexico and the Southern Cone in contrast to the Andes is just one sign that this may be the case. The poor statistical performance of many commonly held explanations shows that ministerial change is not just a kneejerk response to exogenous shocks, the result of changes to negotiated agreements between the president and congress, or characteristics of the individual ministers. What does this mean for the role of risk? As our theory predicts, it does have an effect on ministers. The fact that it is not as consistent as hoped, however, may be testament to empirical weaknesses rather than theoretical ones. First, the ICRG measure of stability does not vary wildly over time in Ecuador, with a standard deviation of 1.57 around a mean of 6.72. Secondly, its insight into measuring the president’s perception of his risk is ultimately limited, since it is based on observable 27 statements and actions. Lastly, a baseline level of instability likely pervades all administrations, dulling the effects of monthly changes. Ministerial exit patterns are not likely to vary greatly from one administration to the next within a single country, and future tests of this theory must consider a cross-section of countries. This issue deserves further study. As mentioned, Correa was ex-President Alfredo Palacio’s Minister of Finance, and used the position and some radical policy rhetoric to leap to the public consciousness. Although only in office for a short while, he used this media attention and public platform as a springboard to launch his presidential candidacy and establish his bona fides as a political heavyweight. The Latin American Weekly Report, suggests that the April 2010 cabinet reshuffling and an increasing reliance on technocrats may have been Correa’s reaction to threats to his power from within his own party, specifically ex-Foreign Minister Fander Falconí and ex-Alianza País ally Alberto Acosta, rather than other parts of the weak and fragmented congress (Farmer 2010: 7). Acosta, for example, used his own visibility to launch his presidential campaign against Correa in the 2013 elections. 5. Conclusion We offer an original theory of ministerial change that builds on existing ideas and enriches the conventional wisdom by providing explanations for administration- and country-level differences through the concept of presidential risk. Whereas the accepted theoretical tools are insufficient to explain sustained high or low rates of turnover, our theory links cabinet management not only to threats faced by the president (from ministers or otherwise) but the underlying level of stability in that administration or 28 country. Individual-level or systemic factors therefore play roles in both systems, but there effects are likely to be accentuated in less stable institutional environments or in places where governments face high risk or the consequences of agency loss are high. The implications in a country like Ecuador are clear. Ecuadorian presidents have faced constant concerns about their own survival since the nineteenth century, so the potential threat posed from excessively weak or excessively strong cabinet ministers is much higher than, for example, in the U.S. This produces an increase in the so-called Goldilocks Effect. Empirically, we offer original data of over 400 ministerial changes in Ecuador in two formats, permitting different types of statistical tests and the inclusion of different types of variables. The results raise questions as to the strength of many conventional explanations for cabinet turnover in presidential democracies. These results are mixed: while electoral concerns and certain administration-level factors do impact cabinet change, many individual-level traits and exogenous factors are statistically insignificant. Neither political or economic crisis nor shifting “mobile majorities” in the legislature appear to have an impact on ministerial exit. Furthermore, basic individual characteristics such as gender and previous experience do not appear to have an effect on duration. Instead, in at least some of the scenarios tested here, political risk has a statistically significant and positive effect on ministerial exit. Still, more cross-national work along the lines of Martínez Gallardo (2005, 2010) is needed in order to determine the macro causes responsible for these patterns. Additionally, what are the consequences of extreme ministerial volatility? Does volatility beget more volatility? Do policies suffer? This is a subject of great import. 29 Cabinet control by the president is a way to signal to the legislature and the public about the direction of policy, willingness to negotiate or collaborate with opposition parties, or simply as a way to acknowledge a previous policy misstep. Much of the literature has focused on cabinet change as a dependent variable, but more is needed that examining ministerial change as an independent variable affecting everything from bureaucratic stability and efficiency, to policy time horizons. There must be substantive differences in the policy output of a ministry with one minister in four years to one with six ministers over the same time span. Cabinets are a nexus of executive decision-making and policy delegation, and understanding both the causes and effects of cabinet change are essential to understanding a president’s intentions and goals. 30 APPENDIX Table. Descriptive statistics Variable Minimum Maximum Event count model: Ministerial exit 0 17 Government stability 4 11 Presidential change 0 1 Coalition change 0 1 Crude oil (WTI, US$) 11.28 133.93 Basic food basket (%) 0 67.2 Hazard model: Ministerial duration Gender Initial appointment Previous experience Electoral year Ministerial type Constitution Administration 1 0 0 0 0 1 1 1 Mean N 1.125 6.716 0.03 0.057 37.653 33.574 401 350 401 401 401 269 1794 385.913 451 1 0.154 479 1 0.342 479 1 0.203 479 1 0.148 479 3 2.159 479 3 1.752 479 12 7.956 479 31 REFERENCES Alemán, Eduardo, and Ernesto Calvo. 2010. "Unified Government, Bill Approval, and the Legislative Weight of the President." Comparative Political Studies:1-24. Altman, David. 2000. "Politics of Coalition Formation and Survival in Multiparty Presidential Democracies: The Case of Uruguay (1989-1997)." Party Politics 6 (3):259-83. Amorim Neto, Octâvio. 1998. 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Revista de Estudios Políticos (Nueva Época) 29 (Septiembre-Octubre):109-44. 34 Table 1. Ministerial duration by administration (1979-2012) President Years Party Mean duration Min Max Jaime Roldós 1979-1981 CFP 238.78 9 544 Osvaldo Hurtado 1981-1984 DP 470.03 62 983 León Febres Cordero 1984-1988 PSC 527.31 7 1221 Rodrigo Borja 1988-1992 ID 664.04 21 1440 Sixto Durán Ballén 1992-1996 PUR 479.05 6 1440 Abdalá Bucaram 1996-1997 PRE 153.35 40 184 Fabián Alarcón 1997-1998 FRA 341.08 102 536 Jamil Mahuad 1998-2000 DP 270.43 1 524 Gustavo Noboa 2000-2003 Ind. 475.24 11 1074 Lucio Gutiérrez 2003-2005 PSP 252.56 3 816 Alfredo Palacio 2005-2007 Ind. 219.41 5 624 Rafael Correa 2007-2012 AP 413.44 4 1794 Ecuador 1979-2012 385.91 1 1794 Latin America 1990-2000 991.25 1 3233 Source: Original; Latin American data from Martínez-Gallardo (2005) N 18 37 32 26 42 17 24 30 33 48 42 102 451 997 35 Table 2. Types of ministerial change by period, 1979-2012 Constitution Exit 1978-1998 1998-2007 2008-2012 Total 2 0 6 Death 4 51 0 137 Presidential change 86 17 12 34 Interim term 5 19 8 47 Transfer 20 115 29 212 Resignation/removal 68 2 0 15 Censoring 13 0 28 28 In office 0 206 77 479 Total 196 36 Table 3. Log-rank equality test for survival functions Admin. Observed Expected Roldós 14 5.81 Hurtado 21 27.51 Febres Cordero 16 28.29 Borja 13 29.18 Durán Ballén 25 32.34 Bucaram 2 2.72 Alarcón 10 11.82 Mahuad 10 11.39 Noboa 23 26.01 Gutiérrez 32 17.21 Palacio 26 12.34 Correa 82 69.38 Total 274 274 Chi-squared 63.23 p value 0.000 37 Table 4. Negative binomial models of ministerial duration in Ecuador Full sample Correa Subsample (1) Exit, Full (2) Exit, Adm. Change (3) Removal (4) Exit (5) Removal Coef/se IRR Coef/se IRR Coef/se IRR Coef/se IRR Coef/se IRR Admin. change 2.919** 18.530** (0.428) (7.928) Risk (t-1) 0.149** 1.161** 0.040 1.040 0.018 1.018 -0.01+ 0.99+ 0.518* 1.679* (0.062) (0.072) (0.061) (0.063) (0.070) (0.071) -0.267 -0.264 -0.297 -0.499 Oil 0.013** 1.014** 0.013** 1.013** 0.014** 1.014** -0.01 0.99 -0.001 0.999 (0.004) (0.004) (0.004) (0.005) (0.005) (0.005) -0.011 -0.01 -0.01 -0.01 Food basket 0.002 1.002 0.007 1.007 0.017 1.017 -0.031 0.97 (0.010) (0.010) (0.011) (0.012) -0.028 -0.029 -0.03 -0.029 Coalition change 1.880** 6.553** 0.193 1.213 0.038 1.039 (0.373) (2.446) (0.384) (0.466) (0.452) (0.470) /lnalpha 0.764** 0.075 0.413** 0.653** 0.406 (0.141) (0.215) (0.198) -0.273 -0.33 N 347 266 266 72 72 log likelihood -469.714 -361.879 -326.720 -104.38 -104.38 * p<0.1, ** p<0.05, *** p<0.001, + p≈0.1 38 Table 5. Cox models of ministerial duration in Ecuador (Breslow method) (6) (7) Variable Hazard ratio/se Hazard ratio/se Gender 0.831 (.16) 0.835 (.16) Initial appointment 0.878 (.12) 0.919 (.13) Previous experience 1.171 (.19) 1.160 (.19) Electoral year 2.153*** (.35) 2.273*** (.38) Ministry type (0=political) Economic 1.616** (.27) 1.608** (.27) Social 1.031 (.16) 1.026 (.16) Constitution (0=1978-1998) 1998-2008 0.326*** (.11) 2008-present 0.453* (.15) Administration (0=Roldós) Hurtado 0.232*** (.08) 0.231*** (.08) Febres Cordero 0.158*** (.06) 0.153*** (.06) Borja 0.135*** (.05) 0.131*** (.05) Durán Ballén 0.2533*** (.09) 0.248*** (.09) Bucaram 0.365 (.28) 0.355 (.27) Alarcón 0.305** (.13) 0.293** (.12) Mahuad 0.408* (.17) 1.227 (.45) Noboa 0.298*** (.11) 0.899 (.24) Gutiérrez 0.783 (.25) 2.380*** (.60) Palacio 0.662 (.23) 1.964** (.51) Correa 0.378** (.12) (omitted) N 451 451 Log-likelihood -1357.409 -1356.497 * p<0.05, ** p<0.01, *** p<0.001, all in one-tailed t tests 39 Figure 1. Range of ministerial behavior in which ministers remain or are removed 1.1 Stable political environment Low competence High competence (Range in which minister remains) 1.2 Unstable political environment Low competence High competence (Range in which minister remains) 40 Figure 2. Monthly ministerial volatility in Ecuador (August 1979 — January 2013) SD B R BC LF C O H L JR A Changes 0 5 10 15 August 1979 - March 1996 R C D AP G LG B G N B W JM AB O FA R 0 5 10 15 April 1996-January 2013 Month 41 Figure 3. Kaplan-Meier survival functions, by presidential administration Kaplan-Meier survival estimates Roldós Febres Cordero Borja 0. 0 0 0 1 00 .25 .50 .75 .00 Hurtado 0 200 400 600 0 500 Durán Ballén 1000 0 500 1000 1500 0 500 Alarcón 1000 1500 Mahuad 0. 0 0 0 1 00 .25 .50 .75 .00 Bucaram 0 500 1000 1500 0 50 100 150 200 0 Gutiérrez 200 400 600 0 200 Palacio 400 600 Correa 0. 0 0 0 1 00 .25 .50 .75 .00 Noboa 0 500 1000 0 200 400 600 800 0 200 400 600 0 500 1000 1500 2000 Days Graphs by Administration 42 Figure 4. Kaplan-Meier survival functions, by ministry type 0. 00 0. 25 0. 50 0. 75 1. 00 Kaplan-Meier survival estimates 0 500 1000 Days Political Social 1500 2000 Economic 43 i One caveat is raised by Amorim Neto (2002), who is careful to note that not all types of cabinet distribution imply coalition government. ii A related research question concerns the sources of cabinet turnover (Amorim Neto and Strøm 2006; Schleiter and Morgan-Jones 2009, 2010). The concept of cabinet control is explicitly explored by Schleiter and Morgan-Jones (2010), who use a principal-agent account of semi presidential cabinets to explain whether cabinet management lies with the president or assembly parties. They combine the Amorim Neto and Strøm (2006) “tug of war” bargaining model between the prime minister and the president with the perspective of parties who negotiate with the president on behalf of the assembly (Schleiter and Morgan-Jones 2009). Broadly speaking, Schleiter and Morgan-Jones (2010) argue that control of semi presidential cabinets depends on the authority that the constitution and elections give to presidential and assembly parties to control the government on behalf of voters. iii Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela. iv A complete list of all ministers and their duration is avarilable in the supplemental appendix and online at [web address removed to preserve author anonymity]. v Three under Borja (Defense Minister Jorge Félix Mena, Health Minister Plutarco Naranjo Vargas, and Foreign Relations Minister Diego Cordovéz) and four under DuránBallén (Housing Minister Francisco Albornoz, Agriculture Minister Mariano González Portes, Labor Minister Alfredo Corral Borrero, and Public Works Minister Pedro López Torres). Ministers Marcela Aguiñaga Vallejo (Environment, 1794 days) and Javier 44 Ponce Cevallos (Defense, 1454 days) actually lasted for a longer period of time, but their terms straddled Correa’s first two terms of office. vi An interesting exception is the interim Gustavo Noboa administration whose cabinet members lasted considerably longer than the average cabinet minister in Ecuador. vii Ecuadorian exceptions include Galo Leoro Franco, who served under presidents Sixto Durán-Ballén and Abdalá Bucaram, and José Ayala Lasso, who served under presidents Fabián Alarcón and Jamil Mahuad. viii The variance for “all exits” is 6.6 and the mean only 1.1. “Removal” has a mean of 1.7 and a mean of 0.6. The Poisson regression returns a large chi-square value (422.71) in the full specification, and a significant test statistic (p<0.001). ix Neither administrative nor coalition change are applicable variables during this period. 45