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Political Predation and Economic Development

  • Azam, Jean-Paul
  • Bates, Robert
  • Biais, Bruno

We analyze a game between citizens and governments, whose type (benevolent or predatory) is unknown to the public. Opportunistic governments mix between predation and restraint. As long as restraint is observed, political expectations improve, people enter the modern sector, and the economy grows. Once there is predation, the reputation of the government is ruined and the economy collapses. If citizens are unable to overthrow this government, the collapse is durable. Otherwise, a new government is drawn and the economy can rebound. Consistent with stylized facts, equilibrium political and economic histories are random, unstable, and exhibit long-term divergence.

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Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 342.

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Date of creation: Mar 2009
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Publication status: Published in Economics & Politics, vol. 21, n°2, juillet 2009, p. 255-277.
Handle: RePEc:ide:wpaper:4372
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