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Institution building and political accountability

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Majumdar , Sumon and Mukand, Sharun W. (2013) Institution building and political accountability. Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2013 (Number 131).

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Abstract

The paper examines the role of policy intervention in engendering institutional change. We show
that first order changes in the political structure (e.g. introduction of democracy) may be undermined
by local political interests and result in persistence in institutions and the (poor) quality
of governance. The paper identifies two effects of development policy as a tool for institutional
change. One, by increasing political accountability, it may encourage nascent democratic governments
to invest in good institutions – the incentive effect. However, we show that it also increases
the incentive of the rentier elite to tighten their grip on political institutions – the political control
effect. Which of these dominate determine the overall impact on institutional quality. Under
some conditions, by getting the elite to align their economic interests with that of the majority,
development policy can lead to democratic consolidation and economic improvement. However if
elite entrenchment is pervasive, then comprehensive change may require more coercive means.

Item Type: Working or Discussion Paper (Working Paper)
Alternative Title:
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH): Public institutions, Democracy , Government policy, Elite (Social sciences) , Economics -- Mathematical models
Series Name: CAGE Online Working Paper Series
Publisher: Department of Economics, University of Warwick
Place of Publication: Coventry, UK
Official Date: June 2013
Dates:
DateEvent
June 2013Published
Volume: Volume 2013
Number: Number 131
Number of Pages: 27
Institution: University of Warwick
Status: Not Peer Reviewed
Publication Status: Published
Date of first compliant deposit: 25 January 2018
Date of first compliant Open Access: 25 January 2018

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