A Unified Theory of Institutional Dynamics

Raouf Boucekkine (), Rodolphe Desbordes, Weihua Ruan and Benteng Zou
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Rodolphe Desbordes: SKEMA Business School [Lille], UniCA - Université Côte d'Azur
Weihua Ruan: Purdue University [West Lafayette]
Benteng Zou: uni.lu - Université du Luxembourg = University of Luxembourg = Universität Luxemburg

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Abstract: We develop a unified dynamic game-theoretic theory of institutional change that delivers three common equilibrium outcomes as limiting cases: Lipsetian transition to democracy, transition through popular revolution, and permanent autocracy. An impulse-control framework captures both the citizens' revolutionary option and the elites' strategic choice of voluntary democratisation, with human capital as the unique endogenousstate and resource windfalls as an exogenous contributor to production and exports. The framework allows us to (1) characterise a reformation frontier, a state-feedbacklocus of minimal concessions that keeps the regime marginally stable as human capital evolves, and (2) identify conditions under which voluntary handover strictly dominates revolution or the status quo, providing a formal stopping rule for elites. We then confront the most distinctive part of the theory, the reformation-frontier mechanism, with data on a panel of 223 autocratic spells between 1970 and 2024. Two empirical signatures of the mechanism are present in the data: the within-spell adjustment of concessions saturates as human capital accumulates, and a cluster of long-lived high-polyarchy autocracies persists on the back of rent revenues. The joint configuration is consistent with our theoryand inconsistent with thin modernisation, rentier-curse, and state-capacity alternatives.

Keywords: dynamic games; reformation frontier; redistribution; education; Political transition (search for similar items in EconPapers)
Date: 2026-05-20
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Working Paper: A Unified Theory of Institutional Dynamics (2026)
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