Autocracies and Development in a Global Economy: A Tale of Two Elites

Akerman, Anders ; Larsson, Anna ; Naghavi, Alireza (2013) Autocracies and Development in a Global Economy: A Tale of Two Elites. Bologna: Dipartimento di Scienze economiche DSE, p. 34. DOI 10.6092/unibo/amsacta/4464. In: Quaderni - Working Paper DSE (775). ISSN 2282-6483.
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Abstract

This paper studies how comparative advantage and the political elites' endowments shape long-run performance in an economy with imperfect political institutions. In a capital-scarce economy, an autocrat catering to the needs of landowners favours openness to trade at an early stage of development, while an autocrat complying with the preferences of capitalists chooses to shelter the economy from trade. The trade regime interacts with economic institutions, and with policies on capital mobility, to govern capital accumulation. A landed autocrat neglects to improve institutions and blocks foreign capital to maximize extractable rents, leading the economy towards stagnation. By contrast, a capitalist autocrat strengthens institutions, which promotes manufacturing TFP growth, gradually shifts the comparative advantage towards manufacturing and renders the economy attractive to foreign investors. Allowing for trade and foreign capital inflows are thus complementary policies that provide an environment of growth and development in the capital autocracy.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Akerman, Anders
Larsson, Anna
Naghavi, Alireza
Keywords
political institutions, development, economic institutions, trade, comparative advantage, capital mobility, capital accumulation
Subjects
ISSN
2282-6483
DOI
Deposit date
26 Jan 2016 10:47
Last modified
26 Jan 2016 10:47
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