Financial Integration in Autocracies: Greasing the Wheel or More to Steal?

Ramin Dadasov, Philipp Harms and Oliver Lorz

No 201014, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: This paper analyzes the influence of financial integration on institutional quality. We construct a dynamic political-economic model of an autocracy in which a ruling elite uses its political power to expropriate the general population. Although financial integration reduces capital costs for entrepreneurs and thereby raises gross incomes in the private sector, the elite may counteract this effect by increasing the level of expropriation. Since de facto political power is linked to economic resources, financial integration also has long-run consequences for the distribution of power and for the rise of an entrepreneurial class.

Keywords: Institutions; Capital Mobility; Political Economy (search for similar items in EconPapers)
JEL-codes: F21 O16 P48 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2010
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (2)

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Journal Article: Financial integration in autocracies: Greasing the wheel or more to steal? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201014

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