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Ethnic Conflicts and the Informational Dividend of Democracy

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  • Laurent-Lucchetti, Jérémy
  • Rohner, Dominic
  • Thoenig, Mathias

Abstract

Prevailing explanations view democracy as an institutional arrangement that solves a class conflict between a rich elite and the rest of population. We study the logic of democratic transition when ethnic tensions are more salient than the poor/rich divide. We build a simple theory where (i) ethnic groups negotiate over allocating the economic surplus and (ii) both military and political mobilizations rest on the unobserved strength of ethnic identity. By eliciting information on mobilization, free and fair elections restore inter-ethnic bargaining efficiency and prevent conflict outbreak. We show that democratic transition can be rationally chosen by autocrats, even if it involves a risk of losing power, as elections reduce the informational rent of the opposition, allowing the legitimately elected ruler to grab more economic surplus. Our setup generates new predictions on the nature of political regime, government tenure, ethnic favoritism and social unrest for ethnically divided countries - all consistent with novel country-level and ethnic group-level panel evidence on democratization in the post-decolonization period.

Suggested Citation

  • Laurent-Lucchetti, Jérémy & Rohner, Dominic & Thoenig, Mathias, 2019. "Ethnic Conflicts and the Informational Dividend of Democracy," CEPR Discussion Papers 14182, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:14182
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    Cited by:

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    2. Dominic Rohner & Mathias Thoenig, 2021. "The Elusive Peace Dividend of Development Policy: From War Traps to Macro Complementarities," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 111-131, August.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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