Working Paper: NBER ID: w8831
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 U.S. industrialized during the nineteenth century, while the landed aristocracy in Russia and Austria-Hungary blocked development.
Keywords: No keywords provided
JEL Codes: H2; N10; N40; O1; O3; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political competition (D72) | Blocking of technological and institutional changes (O33) |
| Fear of losing power (F52) | Blocking of technological and institutional changes (O33) |
| Low political competition (D72) | Resistance to change (O39) |
| External threats (F52) | Reduction in blocking of development (O29) |
| Political rents (D72) | Discouragement of support for beneficial changes (O33) |
| Political competition (robust) (D72) | Support for industrialization (O25) |
| Entrenched elites (D73) | Opposition to industrialization (L59) |