Party Expenses in Dynamic Political Competition – Insights from the German Federal System

Party competition in Germany has undergone several developments in recent years, most importantly the decline of former dominant mass-integration parties (centre-right CDU, social-democratic SPD), the rise of left- and right-wing populist parties (socialist Left, right-wing populist AfD) and, in some states of the Federal Republic, of the Green party. As a result, fragmentation of party systems in the states (Länder), as well as the federal level, has increased. Furthermore, due to the federal system, party competition is coined by a high number of state, local and national elections. While research has addressed, among other aspects, party positioning or coalition-building in the fragmented party system, little is known about party expenses in an increasingly dynamic environment. More generally, research has yet to develop comprehensive approaches to capture the relevance of expenditure as one aspect of party activity. We propose to understand expenditure as an indicator of parties’ strategies: the higher the expenditure, the more parties put emphasis on electoral competition. However, we yet know little about the determinants of parties’ expenditure at the national level, let alone at the regional level. Against this backdrop, the proposed paper seeks to develop explanations of party branches’ expenditure levels in the German federal system. The paper shows expenditure and spending patterns to vary massively between the 16 German states. To further investigate reasons for the differences we focus on party competition (e.g. effective number of parties), incumbency effects, elections at the various levels and the economic context in the respective states. Based on a novel dataset consisting of parties’ expenses in the German Länder and covering the period between 2009 and 2017 (i.e. two federal election cycles), we employ multilevel regression models to examine the determinants of expenditure differences between parties and states. Particularly, the comparison of different periods characterised by different degrees of party system fragmentation at the Länder level allows for insights into the effects of party competition on party expenditure. While party competition between 2009 and 2013 was characterised by two dominant parties (Christian Democrats and Social Democrats), the fragmentation of state-level party systems has increased since 2013. Our study suggests that parties have increasingly pursued diverging strategies in the regions. While all party branches’ expenses in the first period can be approximately equally explained by national and state elections, parties increasingly focus on different electoral arenas since 2013: Whereas the CDU, for instance, has expanded its expenses on state elections, the SPD concentrated growingly on the national elections. Based on the results, we argue to integrate party expenditure levels into party system research. We find that parties react with different strategies to an increasingly dynamic party competition and fragmentation of party systems. While research has dealt extensively with party positions (e.g. researching manifestos, issue salience), a focus on expenditure helps to better understand party strategies in dealing with dynamic competition.