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A note on the U-shaped relationship between political competition and economic freedom

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  • Antonio Saravia

    (American University of Sharjah, United Arab Emirates)

Abstract

We investigate a recent political theory of institutional change according to which institutions of economic freedom are more likely to be adopted at the extreme cases of strong and weak political competition than at cases in between. We find that such a U-shaped relationship is verified when controlling for other political variables and past economic growth, but disappears when controlling for the initial level of development. In this case, the relationship between political competition and the adoption of institutions of economic freedom appears to be positive and linear as suggested by the political principal-agent paradigm.

Suggested Citation

  • Antonio Saravia, 2008. "A note on the U-shaped relationship between political competition and economic freedom," Development Research Working Paper Series 07/2008, Institute for Advanced Development Studies.
    • Handle: RePEc:adv:wpaper:200807
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    File URL: http://www.inesad.edu.bo/pdf/wp07_2008.pdf
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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