Working Paper: NBER ID: w12573
Authors: Gerard Padro i Miquel
Abstract: Autocrats in many developing countries have extracted enormous personal rents from power. In addition, they have imposed inefficient policies including pervasive patronage spending. I present a model in which the presence of ethnic identities and the absence of institutionalized succession processes allow the ruler to elicit support from a sizeable share of the population despite large reductions in welfare. The fear of falling under an equally inefficient and venal ruler that favors another group is enough to discipline supporters. The model predicts extensive use of patronage, ethnic bias in taxation and spending patterns and unveils a new mechanism through which economic frictions translate into increased rent extraction by the leader. These predictions are consistent with the experiences of bad governance, ethnic bias, wasteful policies and kleptocracy in post-colonial Africa.
Keywords: ethnic identities; kleptocracy; patronage; political economy; governance
JEL Codes: D72; H2; O17; O55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Ethnic identity (J15) | leader retention (M51) |
| Fear of opposing rulers (D74) | support for current leader (D79) |
| Leader's resource extraction from supporters (D79) | leader's resource extraction from opposition groups (D74) |
| Leader's resource extraction (L72) | inefficient policies (D61) |
| Fear of instability (C62) | support for leader (D79) |
| Fear of leadership change (D73) | extent of resource extraction (L72) |
| Leader's ability to extract rents (D72) | fear of losing power (F52) |