World Price Shocks, Income, and Democratization
This paper shows how a world price shock can increase the likelihood that democratization must be used to resolve the threat of revolution. Initially, a ruling elite may be able to use trade policy to maintain political stability. But a world price shock can push the country into a situation where the elite face a commitment problem that only democratization can resolve. Because the world price shock may also reduce average incomes, the model provides a way to understand why the level of national income per capita and democracy may not be positively correlated. The model is also useful for understanding dictatorial regimesâ€™ rebuttal of World Bank calls to keep their export markets open in the face of the 2007-08 world food crisis.
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- Ben Zissimos, 2014.
"A Theory of Trade Policy Under Dictatorship and Democratization,"
1403, Exeter University, Department of Economics.
- Benjamin Zissimos, 2017. "A Theory of Trade Policy under Dictatorship and Democratization," CESifo Working Paper Series 6662, CESifo Group Munich.
- repec:ucp:bkecon:9780226731445 is not listed on IDEAS
- Acemoglu,Daron & Robinson,James A., 2009. "Economic Origins of Dictatorship and Democracy," Cambridge Books, Cambridge University Press, number 9780521671422, December.
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