Workshops or Barracks? Productive versus Enforcive Investment and Economic Performance

Jaewoo Lee and Stergios Skaperdas

Working Papers from California Irvine - School of Social Sciences

Abstract: For many countries in the world today and for much of history, investment in ordinary productive capital has been overshadowed by investment in enforcive capital: castles and siege machines; tanks, missiles and army barracks. We introduce a dynamic model which allows for investment in the latter form of capital, in which competing groups contest output through their holdings of enforcive capital. We show how investment in productive capital declines in relation to enforcive investment as the number of competing groups increases, and how this leads to a decline in steady-state output and welfare.

Keywords: INVESTMENTS; CAPITAL (search for similar items in EconPapers)
JEL-codes: E22 (search for similar items in EconPapers)
Pages: 17 pages
Date: 1998
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:fth:calirv:97-98-20

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