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Ethnic Conflicts and the Informational Dividend of Democracy

Jérémy Laurent-Lucchetti, Dominic Rohner () and Mathias Thoenig

No 14182, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Prevailing explanations view democracy as an institutional arrangement that solves a class conflict between a rich elite and the rest of population. We study the logic of democratic transition when ethnic tensions are more salient than the poor/rich divide. We build a simple theory where (i) ethnic groups negotiate over allocating the economic surplus and (ii) both military and political mobilizations rest on the unobserved strength of ethnic identity. By eliciting information on mobilization, free and fair elections restore inter-ethnic bargaining efficiency and prevent conflict outbreak. We show that democratic transition can be rationally chosen by autocrats, even if it involves a risk of losing power, as elections reduce the informational rent of the opposition, allowing the legitimately elected ruler to grab more economic surplus. Our setup generates new predictions on the nature of political regime, government tenure, ethnic favoritism and social unrest for ethnically divided countries - all consistent with novel country-level and ethnic group-level panel evidence on democratization in the post-decolonization period.

JEL-codes: C72 D02 D72 D74 D82 P16 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-mic and nep-pol
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