Working Paper: CEPR ID: DP6414
Authors: Mark Gradstein
Abstract: This paper's point of departure is that low-quality institutions, concentration of political power, and underdevelopment are persistent over time. Its analytical model views an equal distribution of political power as a commitment device to enhance institutional quality thereby promoting growth. The politically powerful coalition contemplates relinquishing of its power, weighing this advantageous consequence against the limit on own appropriative ability that it entails. The possibility of two developmental paths is exhibited: with concentration of political and economic power, low-quality institutions, and slow growth; and a more equal distribution of political and economic resources, high-quality institutions, and faster growth.
Keywords: Growth; Inequality; Institutional Quality; Political Bias
JEL Codes: D31; D72; O10; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political Bias (D72) | Institutional Quality (L15) |
| Income Inequality (D31) | Institutional Quality (L15) |
| Institutional Quality (L15) | Economic Growth (O49) |
| Political Bias (D72) | Economic Growth (O49) |
| Income Inequality (D31) | Income Inequality (D31) |