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Federal Institutions and the Democratic Transition: Learning from South Africa

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Author Info
Robert P. Inman
Daniel L. Rubinfeld
Abstract

We present a model of a peaceful transition in South Africa from white, elite rule under apartheid to a multi-racial democracy. We ask how can the emerging majority credibly promise not to exploit the once ruling elite? Under South Africa's "democratic federalism" the constitution creates an annual policy game where the new majority and the elite each control one policy instrument of importance to the other. The game has a stable, stationary democratic equilibrium that the elite prefer to autocratic rule. For the elite, the move to democracy means higher tax rates, but also higher economic growth; democracy is preferred to apartheid if the elite's rate of time preference is less than the transition's rate of return.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13733.

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Date of creation: Jan 2008
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Handle: RePEc:nbr:nberwo:13733

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Find related papers by JEL classification:
H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
P26 - Economic Systems - - Socialist Systems and Transition Economies - - - Political Economy

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gordon, Nora, 2004. "Do federal grants boost school spending? Evidence from Title I," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1771-1792, August. [Downloadable!] (restricted)
  2. Reinikka, Ritva & Svensson, Jakob, 2004. "The power of information : evidence from a newspaper campaign to reduce capture," Policy Research Working Paper Series 3239, The World Bank. [Downloadable!]
  3. Gruber, Jon & Saez, Emmanuel, 2002. "The elasticity of taxable income: evidence and implications," Journal of Public Economics, Elsevier, vol. 84(1), pages 1-32, April. [Downloadable!] (restricted)
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  4. Ritva Reinikka & Jakob Svensson, 2004. "Local Capture: Evidence From a Central Government Transfer Program in Uganda," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 678-704, May. [Downloadable!] (restricted)
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