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DTP2017 - Development and institutions (wk2)

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Yvan Guichaoua

on 1 February 2017

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Transcript of DTP2017 - Development and institutions (wk2)

A game-theoretic approach

Poor, pro-democracy citizens vs rich, anti-democracy elites
Everybody acts rationally (main difference with the structuralist approach)
Only two regimes are possible: democracy or non-democracy
Democracy benefits the poor, non-democracy benefits the rich
The two parties are in conflict: if someone wins the other loses
The threat of revolution might suffice to push the rich to relinquish power
But the rich may also decide to fight back if they think they lose too much

Class struggle and conditional change 1
Acemoglu and Robinson 2006
What are the factors (i.e. independent variables) making the threat of revolution credible?

Strength of civil society
Structure of the economy (are the rich landowners or industrialists?)
Intergroup inequality
The role of the middle class (a third actor in the game): pro-elite?
Class struggle and conditional change 2
Acemoglu and Robinson 2006
Democracy comes from a combination of political struggle between various sections of the society and structural economic change introduced by capitalism. Two structural changes caused by capitalism:

Strengthening of the working class
Weakening of the landowners

Unintended social consequences:

Pro-democratic collective action becomes easier
Class alliances might be needed to achieve change (petty bourgeoisie, middle class)

P&L 1997, p. 158

Structuralist approach
"Economic development is conducive to democracy to the extent that it, first, creates a large, educated, and articulate middle class of people who are accustomed to thinking for themselves and, second, transforms people's values and motivations" (Inglehart and Welzel 2009, p. 8)

Key concept: ‘survival values’ vs ‘self expression values’

An illustration: traditional apprenticeship systems and contingent individual emancipation in West Africa

Problems with this approach
- Are values uniformly distributed in a society?
- How values translate into behaviours? Who are the agents of change?
- How exactly are values connected to broader structural changes?

Correlating 'freedom' and 'development' (rough attempt)
Institutions and Development
Reflecting on what drives big changes, and, in particular, the links that politics and the economy entertain
Are democracies richer?
Modernisation theory
Conversionary Protestants
--> CPs as 'catalysts' making democratisation more likely
Which direction does the causality go?
From Development to Democracy
What are institutions?
Extractive institutions v inclusive institutions (A&G 2012)
In colonial Latin America, the state focused on coercing indigenous peoples. In neither type of society was there a level playing field or an unbiased legal system. In North Korea, the legal system is an arm of the ruling Communist Party, and in Latin America it was a tool of discrimination against the mass of people. We call such institutions, which have opposite properties to those we call inclusive, extractive economic institutions—extractive because such institutions are designed to extract incomes and wealth from one subset of society to benefit a different subset.
Inclusive economic institutions create inclusive markets, which not only give people freedom to pursue the vocations in life that best suit their talents but also provide a level playing field that gives them the opportunity to do so. Those who have good ideas will be able to start businesses, workers will tend to go to activities where their productivity is greater, and less efficient firms can be replaced by more efficient ones.
Complex social forms governing / shaping peoples' behaviours

Public rules of action and thoughts

Big and small
Legal and informal (trust)
Economic, political, cultural, religious etc.
Transparent (contract) / opaque ('unwritten rules')
Fundamental question: How do institutions change? How plastic are the rules of the game (
institutional stickiness
Of particular importance for dev people: what sort of relationship do economic and political institutions entertain?
Two steps
1. What institutions are
2. Democratic institutions and the economy
caveat: democracy has intrinsic value
From Democracy to Development
Full transcript