Working Paper: NBER ID: w10136
Authors: Daron Acemoglu; James A. Robinson; Thierry Verdier
Abstract: Many developing countries have suffered under the personal rule of kleptocrats', who implement highly inefficient economic policies, expropriate the wealth of their citizens, and use the proceeds for their own glorification or consumption. We argue that the success of kleptocrats rests, in part, on their ability to use a divide-and-rule' strategy, made possible by weaknesses in the institutions in these societies. Members of society need to cooperate in order to depose a kleptocrat, yet such cooperation may be defused by imposing punitive rates of taxation on any citizen who proposes such a move, and redistributing the benefits to those who need to agree to it. Thus the collective action problem can be intensified by threats which remain off the equilibrium path. In equilibrium, all are exploited and no one challenges the kleptocrat. Kleptocratic policies are more likely when foreign aid and rents from natural resources provide rulers with substantial resources to buy off opponents; when opposition groups are shortsighted; when the average productivity in the economy is low; and when there is greater inequality between producer groups (because more productive groups are more difficult to buy off).
Keywords: Kleptocracy; Divide-and-Rule; Political Economy; Weak Institutions
JEL Codes: O12; H00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| foreign aid (F35) | increased capacity for bribery (D73) |
| natural resource rents (Q33) | increased capacity for bribery (D73) |
| increased capacity for bribery (D73) | survival of kleptocracies (O17) |
| kleptocrat's strategy (D73) | lack of effective opposition (D72) |
| temporal perspective of producer groups (J54) | willingness to challenge the kleptocrat (D72) |
| inequality (D63) | stability of kleptocracy (D73) |