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Political transition in resource economies
Author(s) -
Atallah Samer
Publication year - 2018
Publication title -
international journal of economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 11
eISSN - 1742-7363
pISSN - 1742-7355
DOI - 10.1111/ijet.12154
Subject(s) - democratization , elite , democracy , economics , incentive , resource (disambiguation) , natural resource , investment (military) , politics , economic system , government (linguistics) , market economy , capital (architecture) , political economy , political science , computer network , linguistics , philosophy , archaeology , computer science , law , history
This paper explains the lack of democratization in resource‐ exporting countries using a two‐period resource extraction model. There are two classes of agents: the elite who own capital and natural resources, and citizens who own labor. Government policies are designed to ensure that the elite remain in power and that citizens do not have the incentive to revolt. On the other hand, policies in the democracy case are not constrained by the threat of revolution. Compared to the democratic case, the resource is over‐extracted and the investment is lower. Non‐democratic institutions are the rational choice of the elite.