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The Dual Policy in the Dual Economy - The Political Economy of Urban Bias in Dictatorial Regimes

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    One of the most common policy obstacles in the global effort against poverty is what is termed as “urban bias” where rural residents, who constitute majority of the poor in the world, face systematic bias against their economic interests by their own governments. This paper develops a simple political economy model of urban bias in dictatorial regimes. Equilibrium outcomes relating policy outcomes with economic structure, political power, and other behavioral and structural variables are analyzed. The model shows that anti-agricultural biases can emerge in primarily agrarian societies even if there is no bias in political power between urban and rural citizens. Evidence from recent World Bank country level panel data on biases against/for agriculture provides support for the model’s prediction.

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    File URL: http://www2.ne.su.se/paper/wp11_22.pdf
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    Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2011:22.

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    Length: 24 pages
    Date of creation: 15 May 2011
    Handle: RePEc:hhs:sunrpe:2011_0022
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    Department of Economics, Stockholm, S-106 91 Stockholm, Sweden

    Phone: +46 8 16 20 00
    Fax: +46 8 16 14 25
    Web page: http://www.ne.su.se/
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    1. Majumdar, Sumon & Mani, Anandi & Mukand, Sharun W., 2004. "Politics, information and the urban bias," Journal of Development Economics, Elsevier, vol. 75(1), pages 137-165, October.
    2. Timothy Besley & Masayuki Kudamatsu, 2007. "Making autocracy work," LSE Research Online Documents on Economics 3764, London School of Economics and Political Science, LSE Library.
    3. Schiff, Maurice*Valdes, Alberto, 1998. "Agriculture and the macroeconomy," Policy Research Working Paper Series 1967, The World Bank.
    4. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2003. "The Survival of the Welfare State," American Economic Review, American Economic Association, vol. 93(1), pages 87-112, March.
    5. Anderson, Kym, 1995. "Lobbying Incentives and the Pattern of Protection in Rich and Poor Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 43(2), pages 401-423, January.
    6. Krueger, Anne O & Schiff, Maurice & Valdes, Alberto, 1988. "Agricultural Incentives in Developing Countries: Measuring the Effect of Sectoral and Economywide Policies," World Bank Economic Review, World Bank Group, vol. 2(3), pages 255-271, September.
    7. Swinnen, Johan F.M., 2009. "Political Economy of Agricultural Distortions: The Literature to Date," Agricultural Distortions Working Paper 50308, World Bank.
    8. Honma, Masayoshi & Hayami, Yujiro, 1986. "Structure of agricultural protection in industrial countries," Journal of International Economics, Elsevier, vol. 20(1-2), pages 115-129, February.
    9. Anderson, Kym & Kurzweil, Marianne & Martin, William J. & Sandri, Damiano & Valenzuela, Ernesto, 2008. "Methodology for Measuring Distortions to Agricultural Incentives," Agricultural Distortions Working Paper 48326, World Bank.
    10. Bezemer, Dirk & Headey, Derek, 2008. "Agriculture, Development, and Urban Bias," World Development, Elsevier, vol. 36(8), pages 1342-1364, August.
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