Working paper
Political Predation and Economic Development
Jean-Paul Azam, Robert H. Bates, and Bruno Biais
IDEI Working Paper
n. 342, March 2009
Reference
Jean-Paul Azam, Robert H. Bates, and Bruno Biais, “Political Predation and Economic Development”, IDEI Working Paper, n. 342, March 2009.
Abstract
We analyze a game between citizens and governments, whose type (benevolent or predatory) is unknown to the public. Opportunistic governments mix between predation and restraint. As long as restraint is observed, political expectations improve, people enter the modern sector, and the economy grows. Once there is predation, the reputation of the government is ruined and the economy collapses. If citizens are unable to overthrow this government, the collapse is durable. Otherwise, a new government is drawn and the economy can rebound. Consistent with stylized facts, equilibrium political and economic histories are random, unstable, and exhibit long-term divergence.