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Ethnic divisions and the effect of appropriative competition intensity on economic performance

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  • Pierre Pecher

    () (Aix-Marseille University)

Abstract

This paper features a growth model with an appropriative contest and a common-pool investment game between politically organised rival ethnic factions. I determine how the long-run equilibrium coalition shapes incentives to invest, show the existence of a unique steady state, and investigate how the ease to capture rents affects economic performance. The use of numerical simulations concerning a global sample of countries demonstrates that contest intensity can sometimes be beneficial, despite wasteful grabbing behaviours, due to a mechanism related to the concentration of power. When rents become easier to capture, dominant groups have an incentive to expand their influence further. This adjustment can be beneficial as these groups contribute most to capital accumulation.

Suggested Citation

  • Pierre Pecher, 2018. "Ethnic divisions and the effect of appropriative competition intensity on economic performance," Economics of Governance, Springer, vol. 19(2), pages 165-193, May.
  • Handle: RePEc:spr:ecogov:v:19:y:2018:i:2:d:10.1007_s10101-018-0203-6
    DOI: 10.1007/s10101-018-0203-6
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    Cited by:

    1. Dieu Ne Dort Talla Fokam & Paul Ningaye & Celestin Chameni Nembua, 2020. "Ethnic Diversity Management and Poverty in Developing Countries," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 19(1), pages 47-60, June.

    More about this item

    Keywords

    Economic performance; Appropriative competition; Ethnic;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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