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Endogenous Institutional Change After Independence

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  • Congdon Fors, Heather

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

  • Olsson, Ola

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

Abstract

A key event in economic history was the independence of nearly ninety former colonies after World War II. On the basis of qualitative and quantitative evidence, we argue that independence often constituted an institutional disequilibrium that the new regimes reacted to in very different ways. We present a model of endogenous changes in property rights institutions where an autocratic post-colonial ruler faces a basic trade-off between stronger property rights, which increases his dividends from the modern sector, and weaker property rights that increases his ability to appropriate resource rents. The model predicts that revenuemaximizing regimes in control of an abundance of resource rents and with insignificant interests in the modern sector will rationally install weak institutions of private property, a prediction which we argue is well in line with actual developments in for instance DR Congo, Ghana, and Zambia.

Suggested Citation

  • Congdon Fors, Heather & Olsson, Ola, 2005. "Endogenous Institutional Change After Independence," Working Papers in Economics 163, University of Gothenburg, Department of Economics.
  • Handle: RePEc:hhs:gunwpe:0163
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    4. Danne, Christian, 2009. "Commitment devices, opportunity windows, and institution building in Central Asia," MPRA Paper 16597, University Library of Munich, Germany.
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    6. Jin Zhao & Ghulam Rasool Madni & Muhammad Awais Anwar & Syeda Masooma Zahra, 2021. "Institutional Reforms and Their Impact on Economic Growth and Investment in Developing Countries," Sustainability, MDPI, Open Access Journal, vol. 13(9), pages 1-14, April.
    7. Olsson, Ola, 2007. "Conflict diamonds," Journal of Development Economics, Elsevier, vol. 82(2), pages 267-286, March.
    8. Olsson, Ola, 2009. "On the democratic legacy of colonialism," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 534-551, December.
    9. Olsson, Ola & Hansson, Gustav, 2011. "Country size and the rule of law: Resuscitating Montesquieu," European Economic Review, Elsevier, vol. 55(5), pages 613-629, June.
    10. Mizuno, Nobuhiro, 2016. "Political structure as a legacy of indirect colonial rule: Bargaining between national governments and rural elites in Africa," Journal of Comparative Economics, Elsevier, vol. 44(4), pages 1023-1039.
    11. Tcheta-Bampa, Tcheta-Bampa & Kodila-Tedika, Oasis, 2018. "Dynamisation de la malédiction des ressources naturelles en Afrique sur les performances économiques : institution et guerre froide [Curse of Natural Resources and Economic Performance in Africa: I," MPRA Paper 86510, University Library of Munich, Germany.
    12. Ola Olsson, 2006. "Diamonds Are a Rebel's Best Friend," The World Economy, Wiley Blackwell, vol. 29(8), pages 1133-1150, August.
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    14. Congdon Fors, Heather, 2007. "Island Status, Country Size and Institutional Quality in Former Colonies," Working Papers in Economics 257, University of Gothenburg, Department of Economics.
    15. Olsson, Ola, 2007. "On the Institutional Legacy of Mercantilist and Imperialist Colonialism," Working Papers in Economics 247, University of Gothenburg, Department of Economics.
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    More about this item

    Keywords

    institutions; property rights; independence; resource rents; rent seeking;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P14 - Economic Systems - - Capitalist Systems - - - Property Rights

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