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Autocracies and Development in a Global Economy: A Tale of Two Elites

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  • Akerman, Anders

    ()
    (Dept. of Economics, Stockholm University)

  • Larsson, Anna

    ()
    (Dept. of Economics, Stockholm University)

  • Naghavi, Alireza

    ()
    (University of Bologna and FEEM)

Abstract

Data on the growth performances of countries with similar comparative (dis)advantage and political institutions reveal a striking variation across world regions. While some former autocracies such as the East Asian growth miracles have done remarkably well, others such as the Latin American economies have grown at much lower rates. In this paper, we propose a political economy explanation of these diverging paths of development by addressing the preferences of the country's political elite. We build a theoretical framework where factors of production owned by the political elites differ across countries. In each country, the incumbent autocrat will cater to the preferences of the elites when setting trade policy and the property rights regime. We show how stronger property rights may lead to capital accumulation and labor reallocation to the manufacturing sector. This, in turn, can lead to a shift in the comparative advantage, a decision to open up to trade and an inflow of more productive foreign capital. Consistent with a set of stylised facts on East Asia and Latin America, we argue that strong property rights are crucial for success upon globalization.

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Bibliographic Info

Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2011:24.

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Length: 37 pages
Date of creation: 01 Jun 2011
Date of revision:
Handle: RePEc:hhs:sunrpe:2011_0024

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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Phone: +46 8 16 20 00
Fax: +46 8 16 14 25
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Web page: http://www.ne.su.se/
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Keywords: Autocracy; Growth; Political Elites; Landowners; Capitalists; Growth Miracles; Trade; Comparative Advantage; Capital Mobility; Property Rights;

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Cited by:
  1. Michael Carter & John Morrow, 2014. "The Political Economy of Inclusive Rural Growth," CEP Discussion Papers dp1259, Centre for Economic Performance, LSE.

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