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Inequality, Democracy and the Emergence of Institutions

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  • Gradstein, Mark

Abstract

This Paper considers the emergence of institutions as a political outcome, arguing that the support for protection of private property rights is stronger the higher is the economy's aggregate income and the more equal its distribution. When these conditions initially hold, the politically influential rich elite may prefer to relinquish its power through democratization in order to commit future policy-makers to the enforcement of private property rights, thus ensuring larger investment and growth. In a very unequal economy, however, this growth-enhancing democratization will not take place. These conclusions are shown to be consistent with the existing historical and cross-country evidence.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4187.

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Date of creation: Jan 2004
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Handle: RePEc:cpr:ceprdp:4187

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Keywords: democracy; inequality; property rights;

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References

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  1. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, Springer, vol. 9(2), pages 131-165, 06.
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  22. Abhijit Banerjee & Dilip Mookherjee & Kaivan Munshi & Debraj Ray, 2001. "Inequality, Control Rights, and Rent Seeking: Sugar Cooperatives in Maharashtra," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 109(1), pages 138-190, February.
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Citations

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Cited by:
  1. Alberto Chong & Mark Gradstein, 2004. "Inequality and Institutions," Research Department Publications 4361, Inter-American Development Bank, Research Department.
  2. Enrico Perotti & Paolo Volpin, 2004. "Lobbying on Entry," Tinbergen Institute Discussion Papers 04-088/2, Tinbergen Institute.
  3. repec:dgr:uvatin:2004088 is not listed on IDEAS
  4. Enrico Perotti & Paolo Volpin, 2007. "Investor Protection and Entry," Tinbergen Institute Discussion Papers 07-006/2, Tinbergen Institute.
  5. Gradstein, Mark, 2005. "Democracy, Property Rights, Redistribution and Economic Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5130, C.E.P.R. Discussion Papers.
  6. Prabir De, 2010. "Governance, Institutions, and Regional Infrastructure in Asia," Working Papers id:3029, eSocialSciences.
  7. repec:dgr:uvatin:2007006 is not listed on IDEAS
  8. Alberto Chong & Mark Gradstein, 2004. "La desigualdad y las instituciones," Research Department Publications 4362, Inter-American Development Bank, Research Department.

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