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Walk the Line: Conflict, State Capacity and the Political Dynamics of Reform

  • Sanjay Jain

    ()

    (Cambridge University)

  • Sumon Majumdar

    ()

    (Queen's University)

  • Sharun Mukand

    ()

    (University of Warwick)

This paper develops a dynamic framework to analyze the political sustainability of economic reforms in developing countries. First, we demonstrate that economic reforms that are proceeding successfully may run into a political impasse, with the reform's initial success having a negative impact on its political sustainability. Second, we demonstrate that greater state capacity to make compensatory transfers to those adversely affected by reform, need not always help the political sustainability of reform, but can also hinder it. Finally, we argue that in ethnically divided societies, economic reform may be completed not despite ethnic conflict, but because of it.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_1288.pdf
File Function: First version 2011
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Paper provided by Queen's University, Department of Economics in its series Working Papers with number 1288.

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Length: 34 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:qed:wpaper:1288
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