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Exploitation and Growth

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  • McDermott, John

Abstract

I develop a model of exploitation--coercive wealth transfer--and growth based on social importance. Exploitation reduces growth since the return to capital falls with exploitation costs. Initial relative wealth across groups--the measure of social importance--determines which group is the exploiter and how costly exploitation will be. The exploiter selects an exploitation path that maintains its dominant position and rarely maximizes current transfers. Productive minorities and fast-growing groups are most prone to exploitation. International sanctions, if strong, end exploitation; otherwise they increase exploitation and reduce growth. Segregation and apartheid are broadly consistent with the theory. Copyright 1997 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Economic Growth.

Volume (Year): 2 (1997)
Issue (Month): 3 (September)
Pages: 251-78

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Handle: RePEc:kap:jecgro:v:2:y:1997:i:3:p:251-78

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Web page: http://www.springerlink.com/link.asp?id=102931

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  1. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
  2. Perotti, Roberto, 1993. "Political Equilibrium, Income Distribution, and Growth," Review of Economic Studies, Wiley Blackwell, vol. 60(4), pages 755-76, October.
  3. Perotti, Roberto, 1996. " Growth, Income Distribution, and Democracy: What the Data Say," Journal of Economic Growth, Springer, vol. 1(2), pages 149-87, June.
  4. Hirshleifer, Jack, 1995. "Anarchy and Its Breakdown," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 26-52, February.
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Cited by:
  1. Francesco Caselli & Wilbur John Coleman II, 2006. "On the Theory of Ethnic Conflict," CEP Discussion Papers dp0732, Centre for Economic Performance, LSE.
  2. Holger Strulik, 2004. "Social Composition, Social Conflict, and Economic Development," DEGIT Conference Papers c009_018, DEGIT, Dynamics, Economic Growth, and International Trade.
  3. Francesco Caselli & Wilbur John Coleman II, 2006. "On the theory of ethnic conflict," LSE Research Online Documents on Economics 3561, London School of Economics and Political Science, LSE Library.

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