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Political Competition Between Countries and Economic Growth


  • Azam Chaudhry
  • Phillip Garner


Political competition between European countries has been viewed as being a stimulus to the innovation process and part of the reason why Europe was the first region of the world to experience sustained growth. Countries that fell behind their rivals technologically and economically became more vulnerable to exploitation. In this way, the presence of rival states provided added incentive to innovate. This paper uses a simple model of conflict between countries to study the role of political competition in economic growth. The governments of each country are threatened politically by innovation and, hence, face a trade-off between the stability of their regime and keeping up with their rivals. The model shows that "institutional spillovers," such as a decrease in the level of rent-seeking in one country, can affect growth in a competing country. Thus, political fragmentation can be growth enhancing as it can result in more political competition. Copyright © 2006 The Authors; Journal compilation © 2006 Blackwell Publishing Ltd.

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  • Azam Chaudhry & Phillip Garner, 2006. "Political Competition Between Countries and Economic Growth," Review of Development Economics, Wiley Blackwell, vol. 10(4), pages 666-682, November.
  • Handle: RePEc:bla:rdevec:v:10:y:2006:i:4:p:666-682

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    References listed on IDEAS

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    Cited by:

    1. Angus Chu, 2010. "Nation states vs. united empire: Effects of political competition on economic growth," Public Choice, Springer, vol. 145(1), pages 181-195, October.
    2. Cem Karayalçin, 2008. "Divided We Stand, United We Fall: The Hume-North-Jones Mechanism For The Rise Of Europe," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 973-997, August.
    3. Militiades N. Georgiou & Nicholas Kyriazis & Emmanouil M. L. Economou, 2015. "Democracy, Political Stability and Economic performance. A Panel Data Analysis," Journal of Risk & Control, Risk Market Journals, vol. 2(1), pages 1-18.
    4. Azam Chaudhry, 2011. "Tariffs, Trade and Economic Growth in a Institutionals Quality," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(2), pages 31-54, Jul-Dec.
    5. Menegaki, Angeliki N. & Ozturk, Ilhan, 2013. "Growth and energy nexus in Europe revisited: Evidence from a fixed effects political economy model," Energy Policy, Elsevier, vol. 61(C), pages 881-887.
    6. Acemoglu, Daron & Robinson, James A., 2006. "Economic Backwardness in Political Perspective," American Political Science Review, Cambridge University Press, vol. 100(01), pages 115-131, February.
    7. Murat Iyigun & Jared Rubin, 2017. "The Ideological Roots of Institutional Change," Working Papers 17-06, Chapman University, Economic Science Institute.
    8. Chaudhry, Azam & Garner, Phillip, 2013. "The political economy of income comparisons and economic growth," Economic Modelling, Elsevier, vol. 31(C), pages 214-222.
    9. Chaudhry, Azam & Bukhari, Syed Kalim Hyder, 2013. "A structural VAR analysis of the impact of macroeconomic shocks on Pakistan's textile exports," Economic Modelling, Elsevier, vol. 32(C), pages 302-315.
    10. Phillip Garner, 2008. "Congo and Korea: a study in divergence," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(3), pages 326-346.

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