Working Paper: CEPR ID: DP3261
Authors: Daron Acemoglu; James A. Robinson
Abstract: We construct a simple model where political elites may block technological and institutional development, because of a ?political replacement effect.? Innovations often erode elites? incumbency advantage, increasing the likelihood that they will be replaced. Fearing replacement, political elites are unwilling to initiate change, and may even block economic development. We show that elites are unlikely to block development when there is a high degree of political competition, or when they are highly entrenched. It is only when political competition is limited and also their power is threatened that elites will block development. We also show that such blocking is more likely to arise when political stakes are higher, and that external threats may reduce the incentives to block. We argue that this model provides an interpretation for why Britain, Germany and the US industrialized during the nineteenth century, while the landed aristocracy in Russia and Austria-Hungary blocked development.
Keywords: development; industrialization; institutions; political economy
JEL Codes: H20; N10; O10; O30; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political Competition (D72) | Blocking Development (Y70) |
| Political Stakes (D72) | Blocking Development (Y70) |
| Entrenchment (H56) | Blocking Development (Y70) |
| Political Competition (D72) | Resistance to Change (O39) |
| External Threats (F52) | Resistance to Change (O39) |
| Political Competition (D72) | Innovation (O35) |
| Entrenchment (H56) | Innovation (O35) |