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What does political economy tell us about economic development - and vice versa?

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  • Keefer, Philip

Abstract

The author reviews how three pillars of political economy-collective action, institutions, and political market imperfections-help us answer the question: Why do some countries develop and others do not? Each makes tremendous advances in our understanding of who wins and who loses in government decision making, generally, but only a subset of this literature helps us answer the question. The study of political market imperfections strongly suggests that the lack of credibility of pre-electoral political promises and incomplete voter information are especially robust in explaining development outcomes. From the institutional literature, the most powerful explanation of contrasting development outcomes links political checks and balances to the credibility of government commitments.

Suggested Citation

  • Keefer, Philip, 2004. "What does political economy tell us about economic development - and vice versa?," Policy Research Working Paper Series 3250, The World Bank.
    • Handle: RePEc:wbk:wbrwps:3250
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    Citations

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    Cited by:

    1. Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
    2. Pereira, Carlos & Teles, Vladimir Kuhl, 2009. "Political institutions as substitute for democracy: a political economy analysis of economic growth," Textos para discussão 196, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    3. Garance Genicot & Laurent Bouton & Micael Castanheira, 2018. "Electoral Systems and Inequalities in Government Interventions," NBER Working Papers 25205, National Bureau of Economic Research, Inc.
    4. Bandeira, Pablo, 2008. "La relación entre las instituciones y el desarrollo económico de las naciones [The relationship between institutions and economic development]," MPRA Paper 13371, University Library of Munich, Germany.
    5. Katja Kalkschmied, 2020. "Rebundling Institutions," Graz Economics Papers 2020-03, University of Graz, Department of Economics.
    6. Avinash Dixit, 2007. "Evaluating Recipes for Development Success," World Bank Research Observer, World Bank Group, vol. 22(2), pages 131-157, June.
    7. Erdal Atukeren, 2006. "Politico-Economic Determinants of the Crowding-in Effects of Public Investments in Developing Countries," KOF Working papers 06-126, KOF Swiss Economic Institute, ETH Zurich.
    8. Voigt, Stefan, 2011. "Empirical constitutional economics: Onward and upward?," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 319-330.
    9. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, in: Dani Rodrik & Mark Rosenzweig (ed.), Handbook of Development Economics, edition 1, volume 5, chapter 0, pages 4415-4523, Elsevier.
    10. Sue, Eddie D.W. & Wong, Wei-Kang, 2010. "The political economy of housing prices: Hedonic pricing with regression discontinuity," Journal of Housing Economics, Elsevier, vol. 19(2), pages 133-144, June.
    11. Deval Desai & Michael Woolcock, 2012. "The politics of rule of law systems in developmental states: 'political settlements' as a basis for promoting effective justice institutions for marginalized groups," Global Development Institute Working Paper Series esid-008-12, GDI, The University of Manchester.
    12. Akramov, Kamiljon T. & Qureshi, Sarfraz & Birner, Regina & Khan, Bilal Hasan, 2008. "Decentralization, local government elections and voter turnout in Pakistan:," IFPRI discussion papers 754, International Food Policy Research Institute (IFPRI).
    13. Martin Ardanaz & Carlos Scartascini, 2014. "The economic effects of constitutions: do budget institutions make forms of government more alike?," Constitutional Political Economy, Springer, vol. 25(3), pages 301-329, September.
    14. World Bank, 2008. "The Political Economy of Policy Reform : Issues and Implications for Policy Dialogue and Development Operations," World Bank Publications - Reports 7782, The World Bank Group.
    15. Dixit Avinash K, 2010. "Democracy, Autocracy and Bureaucracy," Journal of Globalization and Development, De Gruyter, vol. 1(1), pages 1-47, January.
    16. Ivo Bischoff, 2007. "Model Uncertainty, Political Learning, and Institutions: A Broader View on Mancur Olson's Theory of Institutional Sclerosis," Southern Economic Journal, John Wiley & Sons, vol. 74(1), pages 34-49, July.
    17. Manuel Palma-Rangel, 2006. "Institutions and development in Mexico. Are formal economic reforms enough?," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 21(2), pages 83-103, December.
    18. Bryan K. Ritchie, 2010. "Systemic Vulnerability and Sustainable Economic Growth," Books, Edward Elgar Publishing, number 13731.
    19. Carro Fernandez, Martha, 2007. "Welcoming Foreign Direct Investment? A Political Economy Approach to FDI Policies in Argentina and Brazil," MPRA Paper 47252, University Library of Munich, Germany.

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