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Концентрация Доходов, Нестабильность Демократии И Экономический Рост
[Income Concentration, Instability of Democracy and the Economic Growth]

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Author Info

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

Abstract

In our previous papers (Polterovich V., Popov V., 2007; Polterovich V., Popov V., Tonis A., 2006) it was shown that democratization (increase in the political rights index of the Freedom house in 1970-2000) can negatively affect economic growth, if the quality of institutions at the beginning of the period is low; several mechanisms of such an impact were analyzed. In this paper we offer the brief review of previous results and examine another possible mechanism, which is associated with the unevenness in income distribution. Our empirical (econometric) research demonstrates that under weak institutions both democratization and resource wealth are associated with greater income inequality, which in turn reduces the stability of democratic regimes and increases the chances of return to authoritarianism. The instability of democracy also leads to the deterioration of institutions and suppresses economic growth. These empirical results are being explained in the framework of a game theoretic model that demonstrates instability of democracy under poor institutions and high income inequality.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27561.

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Date of creation: 2009
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Publication status: Published in Economics and Mathematical Methods 1.45(2009): pp. 15-29
Handle: RePEc:pra:mprapa:27561

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Related research

Keywords: income concentration; democracy; autocracy; elections; political stability; economic growth;

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References

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  1. Fidrmuc, Jan, 2001. "Economic Reform, Democracy and Growth during Post-Communist Transition," CEPR Discussion Papers 2759, C.E.P.R. Discussion Papers.
  2. Mark Gradstein & Branko Milanovic, 2000. "Does Liberté = Egalité? A Survey of the Empirical Evidence on the Links between Political Democracy and Income Inequality," CESifo Working Paper Series 261, CESifo Group Munich.
  3. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S158-S183, December.
  4. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
  5. Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
  6. Vladimir Popov, 2006. "Shock Therapy Versus Gradualism Reconsidered: Lessons From Transition Economies After 15 Years Of Reforms," Working Papers w0068, Center for Economic and Financial Research (CEFIR).
  7. Vladimir Popov, 2000. "Shock Therapy Versus Gradualism: The End Of The Debate (Explaining The Magnitude Of Transformational Recession)," Comparative Economic Studies, Palgrave Macmillan, vol. 42(1), pages 1-57, April.
  8. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2007. "Resource Abundance, Political Corruption, and Instability of Democracy," MPRA Paper 19154, University Library of Munich, Germany.
  9. Polterovich, Victor, 2007. "Institutional Trap," MPRA Paper 20595, University Library of Munich, Germany.
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