Instability of Democracy as Resource Curse
AbstractWe suggest a dynamic game theoretic model to explain why resource abundance may lead to instability of democracy. Stationary Markov perfect equilibria of this game with four players – Politician, Oligarch, Autocrat and Public (voters) – are analyzed. Choosing a rate of resource rent tax, potential Autocrat competes with conventional Politician for the office, and Oligarch, the owner of the resource wealth, bribes Politician to influence her decisions. Actual Autocrat's tax policy may be different from the announced one. If the difference is large, then Public may revolt or Oligarch may organize a coup to throw Autocrat down. It is shown that the probability of democracy preservation is decreasing in the amount of resources if the institutional quality is low enough. It does not depend on the amount of resources, if the institutional quality is higher than a threshold. The level of the threshold, however, depends positively on the resource wealth. We have found also that under very low institutional quality, a paradoxical effect takes place: the probability of democracy preservation may decrease with small improvements of institutional quality. It is shown as well that Oligarch earns larger part of rent under democracy than under autocracy. This result conforms to empirical observation which is demonstrated in the paper: under low quality of institutions, democratization leads to higher inequality and inequality entails worsening of the attitude to democracy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 22069.
Date of creation: 2009
Date of revision:
resource abundance; resource curse; democracy; autocracy; elections; political stability;
Find related papers by JEL classification:
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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.:
- Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002.
"Institutions and the resource curse,"
Development and Comp Systems
- Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Institutions and the resource curse," GE, Growth, Math methods 0210004, EconWPA.
- Halvor Mehlum & Karl Moene & Ragnar Torvik, 2004. "Institutions and the Resource Curse," DEGIT Conference Papers c009_012, DEGIT, Dynamics, Economic Growth, and International Trade.
- Mehlum, Halvor & Moene, Karl-Ove & Torvik, Ragnar, 2003. "Institutions and the resource curse," Memorandum 29/2002, Oslo University, Department of Economics.
- Stijns, Jean-Philippe C., 2005.
"Natural resource abundance and economic growth revisited,"
Elsevier, vol. 30(2), pages 107-130, June.
- Jean-Philippe Stijns, 2001. "Natural Resource Abundance And Economic Growth Revisited," Development and Comp Systems 0103001, EconWPA.
- Stijns, Jean-Philippe C., 2001. "Natural Resource Abundance And Economic Growth Revisited," Berkeley Economics Dissertations-in-Progress Series 25127, University of California, Berkeley, Department of Agricultural and Resource Economics.
- Daron Acemoglu & James A. Robinson & Thierry Verdier, 2003.
"Kleptocracy and Divide-and-Rule: A Model of Personal Rule,"
NBER Working Papers
10136, National Bureau of Economic Research, Inc.
- Acemoglu, Daron & Robinson, James A & Verdier, Thierry, 2003. "Kleptocracy and Divide-and-Rule: A Model of Personal Rule," CEPR Discussion Papers 4059, C.E.P.R. Discussion Papers.
- Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
- Clague, Christopher, et al, 1996. " Property and Contract Rights in Autocracies and Democracies," Journal of Economic Growth, Springer, vol. 1(2), pages 243-76, June.
- Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 1999. "Governance matters," Policy Research Working Paper Series 2196, The World Bank.
- Akhmed Akhmedov & Ekaterina Zhuravskaya, 2004.
"Opportunistic Political Cycles: Test in a Young Democracy Setting,"
Economics Working Papers
0047, Institute for Advanced Study, School of Social Science.
- Akhmed Akhmedov & Ekaterina Zhuravskaya, 2004. "Opportunistic Political Cycles: Test in A Young Democracy Setting," The Quarterly Journal of Economics, MIT Press, vol. 119(4), pages 1301-1338, November.
- Akhmed Akhmedov & Ekaterina Zhuravskaya, 2003. "Opportunistic Political Cycles: Test in a Young Democracy Setting," Working Papers w0024, Center for Economic and Financial Research (CEFIR).
- James A. Robinson & Ragnar Torvik & Thierry Verdier, 2003.
"Politcal Foundations of the Resource Curse,"
DELTA Working Papers
2003-33, DELTA (Ecole normale supérieure).
- Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
- Clague, Christopher & Keefer, Philip & Knack, Stephen & Olson, Mancur, 1996. "Property and Contract Rights in Autocracies and Democracies," MPRA Paper 25720, University Library of Munich, Germany.
- Davies, James B. & Sandstrom, Susanna & Shorrocks, Anthony & Wolff, Edward N., 2007.
"Estimating the Level and Distribution of Global Household Wealth,"
Working Paper Series
UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- James B. Davies & Susanna Sandström & Anthony Shorrocks & Edward N. Wolff, 2007. "Estimating the Level and Distribution of Global Household Wealth," University of Western Ontario, Economic Policy Research Institute Working Papers 20075, University of Western Ontario, Economic Policy Research Institute.
- Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
- Daron Acemoglu & Simon Johnson & James Robinson & Pierre Yared, 2005.
"Income and Democracy,"
NBER Working Papers
11205, National Bureau of Economic Research, Inc.
- Brunnschweiler, Christa N., 2008.
"Cursing the Blessings? Natural Resource Abundance, Institutions, and Economic Growth,"
Elsevier, vol. 36(3), pages 399-419, March.
- Christa N. Brunnschweiler, 2006. "Cursing the blessings? Natural resource abundance, institutions, and economic growth," CER-ETH Economics working paper series 06/51, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
- Michael Alexeev & Robert Conrad, 2009. "The Elusive Curse of Oil," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 586-598, August.
- Rodriguez, Francisco & Sachs, Jeffrey D, 1999. " Why Do Resource-Abundant Economies Grow More Slowly?," Journal of Economic Growth, Springer, vol. 4(3), pages 277-303, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.