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Institution Building and Political Accountability
Author(s) -
MAJUMDAR SUMON,
MUKAND SHARUN W.
Publication year - 2015
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12136
Subject(s) - accountability , incentive , elite , politics , consolidation (business) , democracy , subsidy , institution , economics , democratic consolidation , modernization theory , intervention (counseling) , political economy , economic policy , economic system , political science , market economy , economic growth , democratization , finance , psychology , psychiatry , law
The paper examines the role of policy intervention in catalyzing institutional change. We identify two effects of development policy as a tool for institutional change. By increasing political accountability, it may encourage nascent democratic governments to invest in good institutions. However, it also increases incentives of the rentier elite to tighten their grip on political institutions. Which of these effects dominate determine if development policy will lead to democratic consolidation and economic improvement or to the worsening of existing institutions. If the elite are deeply entrenched, then modernization may require combining development policy with subsidies.