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Нестабильность Демократии В Странах, Богатых Ресурсами
[Instability of Democracy in Resource Abundant Countries]

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Author Info

  • Polterovich, Victor
  • Popov, Vladimir
  • Tonis, Alexander

Abstract

We analyze data on sustainability of democratic regimes in resource rich countries and suggest a two-period model to explain why resource abundance may lead to instability of democracy in some countries, but does not create any difficulties for democratic system in other ones. Our central idea is as follows. If a country is abundant by point resources, this creates a prerequisite for resource owners to have dominant economic power. If institutions are weak under democracy, the economic power may be converted into political one. Resource owners («oligarchs») can thrust their preferred decisions on a parliament, bribing politicians. This creates a base for a potential Autocrat's strategy to get power. Rate of resource rent tax is considered as the only policy instrument in our simple model. The tax affects the income of a representative voter. Choosing a tax rate, Autocrat competes with conventional Politician (a representative political party) for the office. Our model takes into account the fact that the actual Autocrat's policy may be different from the announced one. If the difference between the two policies is big, then the public may rise up and throw the Autocrat down. Our main conclusions from the model exploration are as follows. The probability of democracy preservation is decreasing in the amount of resources, if the institutional quality is low enough. It is independent of resources and is determined only by cultural characteristics of the society, if the institutional quality is higher than the threshold. The level of the threshold, however, is positively dependent on the resource amount. These effects are consequences of the optimal Autocrat policy: the larger is the amount of resources, the stronger are Oligarch's incentives (inspired by Autocrat's policy) to bribe politicians.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 22840.

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Date of creation: 2008
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Publication status: Published in HSE Economic Journal 2.12(2008): pp. 176-200
Handle: RePEc:pra:mprapa:22840

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Related research

Keywords: resource abundance; resource curse; democracy; autocracy; elections; political stability;

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References

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  1. Akhmed Akhmedov & Ekaterina Zhuravskaya, 2004. "Opportunistic Political Cycles: Test in A Young Democracy Setting," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(4), pages 1301-1338, November.
  2. 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.
  3. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, Elsevier, vol. 59(1), pages 43-76, June.
  4. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2008. "Income and Democracy," American Economic Review, American Economic Association, American Economic Association, vol. 98(3), pages 808-42, June.
  5. Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
  6. Acemoglu, Daron & Robinson, James A & Verdier, Thierry, 2003. "Kleptocracy and Divide-and-Rule: A Model of Personal Rule," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4059, C.E.P.R. Discussion Papers.
  7. Stijns, Jean-Philippe C., 2001. "Natural Resource Abundance And Economic Growth Revisited," Berkeley Economics Dissertations-in-Progress Series, University of California, Berkeley, Department of Agricultural and Resource Economics 25127, University of California, Berkeley, Department of Agricultural and Resource Economics.
  8. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2004. "Institutions and the Resource Curse," DEGIT Conference Papers, DEGIT, Dynamics, Economic Growth, and International Trade c009_012, DEGIT, Dynamics, Economic Growth, and International Trade.
  9. Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2006. "Political foundations of the resource curse," Journal of Development Economics, Elsevier, Elsevier, vol. 79(2), pages 447-468, April.
  10. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, Elsevier, vol. 67(2), pages 455-470, April.
  11. 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.
  12. Rodriguez, Francisco & Sachs, Jeffrey D, 1999. " Why Do Resource-Abundant Economies Grow More Slowly?," Journal of Economic Growth, Springer, Springer, vol. 4(3), pages 277-303, September.
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