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On the political economy of a backward region


  • Abhirup Sarkar


Purpose - The purpose of this paper is to develop a political economy model for a less developed region where a significantly large number of people belonging to the informal sector depend on political favours for their survival due to ill-defined property rights. The purpose is to show that in such a scenario, democracy and political competition might lead to economic stagnation. Design/methodology/approach - The arguments in the paper are represented in terms of a theoretical model. Findings - The central result is that the party with a better political organization will have the incentive to maximize the size of the informal sector, which will also maximize its probability of winning. In equilibrium this party choosing anti-development policies will have a higher probability to be in power. Thus universal franchise may lead to inefficiencies in such economies. These inefficiencies stem from ill-defined property rights in the informal sector. Originality/value - This paper is an original contribution to the class of political economy models of less developed countries.

Suggested Citation

  • Abhirup Sarkar, 2010. "On the political economy of a backward region," Indian Growth and Development Review, Emerald Group Publishing, vol. 3(2), pages 122-137, September.
  • Handle: RePEc:eme:igdrpp:v:3:y:2010:i:2:p:122-137

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    References listed on IDEAS

    1. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659 Elsevier.
    2. Philip Keefer & Stuti Khemani, 2005. "Democracy, Public Expenditures, and the Poor: Understanding Political Incentives for Providing Public Services," World Bank Research Observer, World Bank Group, vol. 20(1), pages 1-27.
    3. Barro, Robert J, 1996. "Democracy and Growth," Journal of Economic Growth, Springer, vol. 1(1), pages 1-27, March.
    4. Persson, Torsten & Tabellini, Guido, 1999. "Political economics and macroeconomic policy," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 22, pages 1397-1482 Elsevier.
    5. Keefer, Philip & Khemani, Stuti, 2003. "Democracy, public expenditures, and the poor," Policy Research Working Paper Series 3164, The World Bank.
    6. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    7. Gene M. Grossman & Elhanan Helpman, 1996. "Electoral Competition and Special Interest Politics," Review of Economic Studies, Oxford University Press, vol. 63(2), pages 265-286.
    8. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    9. repec:cup:apsrev:v:53:y:1959:i:01:p:69-105_00 is not listed on IDEAS
    10. Meltzer, Allan H & Richard, Scott F, 1981. "A Rational Theory of the Size of Government," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 914-927, October.
    11. William D. Nordhaus, 1975. "The Political Business Cycle," Review of Economic Studies, Oxford University Press, vol. 42(2), pages 169-190.
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    Cited by:

    1. Das, Upasak, 2015. "Does Political Activism and Affiliation Affect Allocation of Benefits in the Rural Employment Guarantee Program: Evidence from West Bengal, India," World Development, Elsevier, vol. 67(C), pages 202-217.


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