and IT services. The data follow a complex survey design, with stratification defined by firm size,<sup>18</sup> sector, and location; the surveys carry sampling weights and, so, they are nationally representative of a substantial portion of the private sector economy.<sup>19</sup> The surveys use a standardized instrument and are conducted on an economy-by-economy basis, though they are frequently implemented in multi-economy roll-outs. We include all data from the most recent implementation of the surveys, conducted from 2018 through early 2020. Importantly, the surveys all include common variables that provide clear measures of interactions with public officials and a number of firm-level characteristics, including experiences of the broader business environment. Full details on the various means of political access (items) and other variables of interest are included below.

# **3.1 Items: The Political Interactions of Firms**

## _<u>Political connections</u>_

As noted above, we place specific importance on direct political connections. While a broad literature in both economics and political science has considered political connections directly, the definition of these connections varies substantially. One direct definition is if a politician holds a managerial or decisionmaking position in a firm (e.g. Faccio (2006); Khwaja and Mian (2005)). This direct definition can also be extended to include corporate Boards of Directors as well (Goldman et al., 2013). Still, others have extended the definition of political connections to close relationships that require specific context. Gomez et al. (1999), followed by Johnson and Mitton (2003), rely on a listing of firms with friendships and close ties to a handful of top leaders in Malaysia. Fisman (2001) uses a ‘Suharto Dependency Index’ in Indonesia. Rijkers et al. (2017) leverage a data set connecting firms to the holdings of the Ben Ali family in Tunisia. Likewise such connections can be extended to school networks, as well as close advisors and friends (see, for example, Bertrand et al. (2018)’s analysis in France). Kubinec et al. (2021) employ both self-reported political connections on a 1 to 10 scale and a measure of aggregated relationships between firms and the state; they find that the self-reported scale tends to be more theoretically valid than the aggregated observed measure.

The specificity of connections across several disparate economies, in turn, presents a challenge. The nature of connections in one economy may very well not translate to another. Take the role of the military, which may evoke a wide range of the meanings of political connections depending on the context of a specific place. Our need for a measure with plausible, directional consistency toward political influence, gives us a reason to favor a direct measure of connections that is widely applicable. For this, we define political connections using the measure from the survey: _Has the owner, CEO, top manager, or any of the board members of this firm ever been elected or appointed to a political position in this country?_ We note that this measure is not necessarily ideal in the sense that it is not fully comprehensive. Previous

> 18Firm size is determined by the total number of workers and excludes firms with fewer than 5 workers. The size categories are small (5–19 workers), medium (20–99), and large (100+).

> 19The surveys’ population of inference excludes certain ownership structures, such as non-profits or 100 percent government-owned establishments. For more details on the survey methodology, refer to the Data Appendix or see `https://www.enterprisesurveys.org/en/methodology` .

10