studies have illustrated that intensive knowledge of a given context can yield an economy-specific measure of connections, such detail is unlikely available across as wide of a range as the 41 economies included in our data. What is more, such connections are still likely to be measured with error vis-`a-vis their ability to capture influence. Some connections may result in influence, others may not. The advantage of using an exploratory technique such as IRT is that it allows us to use the combination of several political interactions, with our measure of political connections as an anchor of sorts, as generally indicative of influence: that is, it frees us from relying on a single political interaction alone.

# _Government ownership_

Our other items—that is the other means of gaining political influence—perhaps do not have as much ambiguity in their measurement as the indicator for political connections, but we may have reason to believe that they differently reflect underlying political influence.<sup>20</sup> Consider partial state or government ownership. We observe highly variable levels of government ownership across the 41 economies (see Table 1 below).<sup>21</sup> These patterns are unsurprising, as different governments have engaged in varying levels of either privatization or the ‘corporatization’ of state ownership, particularly given the large number of formerly centrally planned economies in our data set (Shirley, 1999). Often the exchange between firms with partial state ownership and politicians is framed as the latter taking advantage of the resources of private enterprise to enrich themselves or bolster their political position (e.g., Shleifer and Vishny (1994)). We also note that there can be a positive return to the firm from this ownership connection; this can occur through regulation restricting new entrants or, in the case of transitional privatization, through the choice and structure of the buyers the state chooses (Bennett and Maw, 2003). That is, _a priori_ , we do not know whether to expect if state ownership will enhance or limit political influence.

# _Business associations and lobbying_

Participation in business and industry groups can be seen as a balance between the private interests of firms, the transactional costs of collective action, and the ability to move political actors (Grossman and Helpman, 2001). To act collectively, business associations must overcome a natural inclination of private actors to passively benefit from like interests by free-riding in the absence of compulsion or specific, ‘selective’ goods (Olson, 1965). The incentives of those within such collective action groups will be to penalize and reduce free riding (Becker, 1983). In equilibrium, then, it is unsurprising that in many economies, membership in industry chambers, labor groups, and other associations is mandatory. It follows that different firms, including those with more or less influence, will draw different benefits that these associations confer, including providing key information, coordinating market actors, and even engaging in collective negotiations.

> 20We note that this is a restatement of the construction of the Measurement Model in 2.2, which pins political connections to 1, but does not impose any directional constraints on the discrimination parameters of other items. 21Note that the Enterprise Surveys require at least some level of private ownership to be considered eligible for the survey, and so firms with complete state ownership are excluded.

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