On the political economy of a backward region

Abhirup Sarkar

Indian Growth and Development Review, 2010, vol. 3, issue 2, 122-137

Abstract: Purpose - The purpose of this paper is to develop a political economy model for a less developed region where a significantly large number of people belonging to the informal sector depend on political favours for their survival due to ill‐defined property rights. The purpose is to show that in such a scenario, democracy and political competition might lead to economic stagnation. Design/methodology/approach - The arguments in the paper are represented in terms of a theoretical model. Findings - The central result is that the party with a better political organization will have the incentive to maximize the size of the informal sector, which will also maximize its probability of winning. In equilibrium this party choosing anti‐development policies will have a higher probability to be in power. Thus universal franchise may lead to inefficiencies in such economies. These inefficiencies stem from ill‐defined property rights in the informal sector. Originality/value - This paper is an original contribution to the class of political economy models of less developed countries.

Keywords: Political economy; Economic growth; Developing countries; Property rights; India (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:igdrpp:v:3:y:2010:i:2:p:122-137

DOI: 10.1108/17538251011084455

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