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Концентрация Доходов, Нестабильность Демократии И Экономический Рост
[Income Concentration, Instability of Democracy and the Economic Growth]

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

In our previous papers (Polterovich V., Popov V., 2007; Polterovich V., Popov V., Tonis A., 2006) it was shown that democratization (increase in the political rights index of the Freedom house in 1970-2000) can negatively affect economic growth, if the quality of institutions at the beginning of the period is low; several mechanisms of such an impact were analyzed. In this paper we offer the brief review of previous results and examine another possible mechanism, which is associated with the unevenness in income distribution. Our empirical (econometric) research demonstrates that under weak institutions both democratization and resource wealth are associated with greater income inequality, which in turn reduces the stability of democratic regimes and increases the chances of return to authoritarianism. The instability of democracy also leads to the deterioration of institutions and suppresses economic growth. These empirical results are being explained in the framework of a game theoretic model that demonstrates instability of democracy under poor institutions and high income inequality.

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File URL: http://mpra.ub.uni-muenchen.de/27561/1/MPRA_paper_27561.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 27561.

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Date of creation: 2009
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Publication status: Published in Economics and Mathematical Methods 1.45(2009): pp. 15-29
Handle: RePEc:pra:mprapa:27561
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Web page: http://mpra.ub.uni-muenchen.de

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  1. Vladimir Popov, 2000. "Shock Therapy Versus Gradualism: The End Of The Debate (Explaining The Magnitude Of Transformational Recession)," Comparative Economic Studies, Palgrave Macmillan, vol. 42(1), pages 1-57, April.
  2. Polterovich, Victor & Popov, Vladimir, 2007. "Democratization, Quality of Institutions and Economic Growth," MPRA Paper 19152, University Library of Munich, Germany.
  3. Mark Gradstein & Branko Milanovic, 2000. "Does Liberté = Egalité? A Survey of the Empirical Evidence on the Links between Political Democracy and Income Inequality," CESifo Working Paper Series 261, CESifo Group Munich.
  4. Fidrmuc, Jan, 2003. "Economic reform, democracy and growth during post-communist transition," European Journal of Political Economy, Elsevier, vol. 19(3), pages 583-604, September.
  5. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S158-S183, December.
  6. Polterovich, Victor & Popov, Vladimir & Tonis, Alexander, 2007. "Resource Abundance, Political Corruption, and Instability of Democracy," MPRA Paper 19154, University Library of Munich, Germany.
  7. Polterovich, Victor, 2007. "Institutional Trap," MPRA Paper 20595, University Library of Munich, Germany.
  8. Torvik, Ragnar, 2002. "Natural resources, rent seeking and welfare," Journal of Development Economics, Elsevier, vol. 67(2), pages 455-470, April.
  9. Vladimir Popov, 2006. "Shock Therapy Versus Gradualism Reconsidered: Lessons From Transition Economies After 15 Years Of Reforms," Working Papers w0068, Center for Economic and Financial Research (CEFIR).
  10. Phillip Arestis & Michelle Baddeley & John S.L. McCombie (ed.), 2007. "Economic Growth," Books, Edward Elgar, number 3958.
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