Institution Building and Political Accountability

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...

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Bibliographic Details
Published in:Journal of public economic theory 2015-08, Vol.17 (4), p.504-527
Main Authors: MAJUMDAR, SUMON, MUKAND, SHARUN W.
Format: Article
Language:English
Subjects:
Accountability
Chambers of commerce
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Summary: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.
ISSN:1097-3923
1467-9779
DOI:10.1111/jpet.12136