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The Simple Analytics of Elite Behaviour Under Limited State Capacity

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  • Bourguignon, Francois
  • Verdier, Thierry

Abstract

This paper discusses the issue of taxation and redistribution in economies dominated by Elites with limited state capacity. Within a simple aggregate framework, we discuss the political economy incentives of Elites to tax, redistribute and increase state capacity. In particular, the analysis highlights the role of complementarities or substitutability in the production process between the factors controlled by the Elite and other social groups and shows the existence of natural increasing returns for Elites to increase state capacity. The paper also discusses how the incentives for state capacity building are affected by political threats of power shifting.

Suggested Citation

  • Bourguignon, Francois & Verdier, Thierry, 2010. "The Simple Analytics of Elite Behaviour Under Limited State Capacity," WIDER Working Paper Series 104, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:wp2010-104
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    References listed on IDEAS

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    1. Francesco Caselli & Wilbur John Coleman II, 2006. "The World Technology Frontier," American Economic Review, American Economic Association, vol. 96(3), pages 499-522, June.
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    Cited by:

    1. David Juárez-Luna & Christian Ghiglino, 2014. "Elite capture of democratic politics: the role of social identity," Working papers DTE 573, CIDE, División de Economía.
    2. David Juárez-Luna & Christian Ghiglino, 2014. "Elite capture of democratic politics: the role of social identity," Working papers DTE 573, CIDE, División de Economía.
    3. Verdier, Thierry, 2010. "Ouverture, conflits et capacité étatique : une perspective d’économie politique," L'Actualité Economique, Société Canadienne de Science Economique, vol. 86(4), pages 415-449, décembre.

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    Keywords

    Elites; redistribution; political economy; state capacity building;

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