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Political competition, fiscal policy, and economic performance in techno-creative places

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  • Batabyal, Amitrajeet A.
  • Kourtit, Karima
  • Nijkamp, Peter

Abstract

This paper introduces a model of political competition under distinct institutional regimes to trace the economic performance of what we call “techno-creative places.” Specifically, we analyze how political competition in high-tech places that are creative in the sense of Richard Florida affects fiscal (tax) policy and consequent economic outcomes. There are three stylized groups of actors in our analysis: laborers or workers, techno-creative class members or entrepreneurs, and the elites who make the political decisions. We study two broad institutional-economic scenarios. In the first (second) scenario, the likelihood of political power shifting permanently from the elites to entrepreneurs is an increasing (decreasing) function of the net income of a representative techno-creative entrepreneur. Our study addresses the institutional implications of both scenarios and then comments on the implications of these two scenarios for the welfare of the elites and the techno-creative entrepreneurs.

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  • Batabyal, Amitrajeet A. & Kourtit, Karima & Nijkamp, Peter, 2025. "Political competition, fiscal policy, and economic performance in techno-creative places," World Development, Elsevier, vol. 188(C).
  • Handle: RePEc:eee:wdevel:v:188:y:2025:i:c:s0305750x24003528
    DOI: 10.1016/j.worlddev.2024.106881
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    1. Batabyal, Amitrajeet & Beladi, Hamid, 2024. "Distortionary Taxes and Economic Growth in a Political-Economy Model of a Creative Region," MPRA Paper 123673, University Library of Munich, Germany, revised 07 Feb 2025.

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    More about this item

    Keywords

    Techno-Creative Class; Elite; Entrepreneur; Political Competition; Tax Policy;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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