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Walk the Line: Conflict, State Capacity and the Political Dynamics of Reform

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  • Sanjay Jain

    ()
    (Cambridge University)

  • Sumon Majumdar

    ()
    (Queen's University)

  • Sharun Mukand

    ()
    (University of Warwick)

Abstract

This paper develops a dynamic framework to analyze the political sustainability of economic reforms in developing countries. First, we demonstrate that economic reforms that are proceeding successfully may run into a political impasse, with the reform's initial success having a negative impact on its political sustainability. Second, we demonstrate that greater state capacity to make compensatory transfers to those adversely affected by reform, need not always help the political sustainability of reform, but can also hinder it. Finally, we argue that in ethnically divided societies, economic reform may be completed not despite ethnic conflict, but because of it.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1288.pdf
File Function: First version 2011
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Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1288.

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Length: 34 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:qed:wpaper:1288

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Keywords: Economic reform; State capacity; Politics; Redistribution; Compensation; Ethnic Conflict;

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  1. Hausmann, Ricardo & Pritchett, Lant & Rodrik, Dani, 2004. "Growth Accelerations," Working Paper Series rwp04-030, Harvard University, John F. Kennedy School of Government.
  2. Cecilia Testa, 2004. "Party Polarization and Electoral Accountability," Econometric Society 2004 Latin American Meetings 130, Econometric Society.
  3. Baldwin, Robert E., 2008. "One Economics, Many Recipes: Globalization, Institutions, and Economic Growth by Dani Rodrik Princeton, NJ: Princeton University Press, 2007," World Trade Review, Cambridge University Press, vol. 7(03), pages 573-575, July.
  4. Sanjay Jain & Sharun W. Mukand, 2003. "Redistributive Promises and the Adoption of Economic Reform," American Economic Review, American Economic Association, vol. 93(1), pages 256-264, March.
  5. Rubinchik, Anna & Wang, Ruqu, 2008. "A note on redistributive fairness and economic reform," Journal of Development Economics, Elsevier, vol. 86(2), pages 447-452, June.
  6. Werner, Alejandro M., 1999. "Building consensus for stabilizations," Journal of Development Economics, Elsevier, vol. 59(2), pages 319-336, August.
  7. José R. Sánchez-Fung, 2008. "Book Review: One Economics, Many Recipes: Globalization, Institutions and Economic Growth by Dani Rodrik," Indian Growth and Development Review, Emerald Group Publishing, vol. 1(2), pages 252-256, December.
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