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Нестабильность Демократии В Странах, Богатых Ресурсами
[Instability of Democracy in Resource Abundant Countries]

Author

Listed:
  • Polterovich, Victor
  • Popov, Vladimir
  • Tonis, Alexander

Abstract

We analyze data on sustainability of democratic regimes in resource rich countries and suggest a two-period model to explain why resource abundance may lead to instability of democracy in some countries, but does not create any difficulties for democratic system in other ones. Our central idea is as follows. If a country is abundant by point resources, this creates a prerequisite for resource owners to have dominant economic power. If institutions are weak under democracy, the economic power may be converted into political one. Resource owners («oligarchs») can thrust their preferred decisions on a parliament, bribing politicians. This creates a base for a potential Autocrat's strategy to get power. Rate of resource rent tax is considered as the only policy instrument in our simple model. The tax affects the income of a representative voter. Choosing a tax rate, Autocrat competes with conventional Politician (a representative political party) for the office. Our model takes into account the fact that the actual Autocrat's policy may be different from the announced one. If the difference between the two policies is big, then the public may rise up and throw the Autocrat down. Our main conclusions from the model exploration are as follows. The probability of democracy preservation is decreasing in the amount of resources, if the institutional quality is low enough. It is independent of resources and is determined only by cultural characteristics of the society, if the institutional quality is higher than the threshold. The level of the threshold, however, is positively dependent on the resource amount. These effects are consequences of the optimal Autocrat policy: the larger is the amount of resources, the stronger are Oligarch's incentives (inspired by Autocrat's policy) to bribe politicians.

Suggested Citation

  • Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2008. "Нестабильность Демократии В Странах, Богатых Ресурсами
    [Instability of Democracy in Resource Abundant Countries]
    ," MPRA Paper 22840, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:22840
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    References listed on IDEAS

    as
    1. Stijns, Jean-Philippe C., 2005. "Natural resource abundance and economic growth revisited," Resources Policy, Elsevier, vol. 30(2), pages 107-130, June.
    2. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Institutions and the Resource Curse," Economic Journal, Royal Economic Society, vol. 116(508), pages 1-20, January.
    3. Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
    4. Akhmed Akhmedov & Ekaterina Zhuravskaya, 2004. "Opportunistic Political Cycles: Test in a Young Democracy Setting," The Quarterly Journal of Economics, Oxford University Press, vol. 119(4), pages 1301-1338.
    5. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2008. "Income and Democracy," American Economic Review, American Economic Association, vol. 98(3), pages 808-842, June.
    6. Clague, Christopher & Keefer, Philip & Knack, Stephen & Olson, Mancur, 1996. "Property and Contract Rights in Autocracies and Democracies," Journal of Economic Growth, Springer, vol. 1(2), pages 243-276, June.
    7. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
    8. Robinson, James A. & Torvik, Ragnar & Verdier, Thierry, 2006. "Political foundations of the resource curse," Journal of Development Economics, Elsevier, vol. 79(2), pages 447-468, April.
    9. Daron Acemoglu & James A. Robinson & Thierry Verdier, 2003. "Kleptocracy and Divide-and-Rule: A Model of Personal Rule," NBER Working Papers 10136, National Bureau of Economic Research, Inc.
    10. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
    11. Rodriguez, Francisco & Sachs, Jeffrey D, 1999. "Why Do Resource-Abundant Economies Grow More Slowly?," Journal of Economic Growth, Springer, vol. 4(3), pages 277-303, September.
    12. Michael Alexeev & Robert Conrad, 2009. "The Elusive Curse of Oil," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 586-598, August.
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    Citations

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    Cited by:

    1. Рубинштейн Александр Яковлевич, "undated". "Экономический Кризис И Новая Парадигма Общественной Поддержки Опекаемых Благ
      [Economic Crisis and the New Paradigm of Public Support of the Patronized Goods]
      ," Working papers a:pru175:ye:2015:2, Institute of Economics.
    2. Рубинштейн Александр Яковлевич, "undated". "Элементы Общей Теории Изъянов Смешанной Экономики
      [Elements of the general theory of the mixed economy defects]
      ," Working papers a:pru175:ye:2017:3, Institute of Economics.
    3. Рубинштейн Александр Яковлевич, "undated". "Введение В Общую Теорию Изъянов Смешанной Экономики
      [Introduction to the general theory of defects of the mixed economy]
      ," Working papers a:pru175:ye:2016:3, Institute of Economics.
    4. Рубинштейн Александр Яковлевич & Городецкий Андрей Евгеньевич, "undated". "Некоторые Аспекты Экономической Теории Государства. Научный Доклад
      [Some aspects of the economic theory of the state. Scientific report]
      ," Working papers a:pru175:a:pgo471:ye:2017, Institute of Economics.

    More about this item

    Keywords

    resource abundance; resource curse; democracy; autocracy; elections; political stability;

    JEL classification:

    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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