Why doesn't Capitalism flow to Poor Countries?

Rafael Di Tella and Robert MacCulloch

Others from University Library of Munich, Germany

Abstract: We find evidence consistent with the hypothesis that governments in poor countries have a more left wing rhetoric than those in OECD countries. A possible explanation is that corruption, which is more widespread in poor countries, reduces the electoral appeal of capitalism more than that of socialism. The empirical pattern of beliefs within countries is consistent with this explanation: people who perceive corruption to be high in the country are also more likely to lean left ideologically and to declare to support a more intrusive government in economic matters. Finally, we show that the corruption-left connection can be explained if corruption is seen as unfair behavior on the part of capitalists. Voters then react by moving left, even if this is materially costly to them. There is a negative ideological externality since the existence of corrupt entrepreneurs hurts good entrepreneurs by reducing the general appeal of capitalism.

Keywords: beliefs; corruption; fairness; legitimacy; ideological externality. (search for similar items in EconPapers)
JEL-codes: D6 E62 K42 P16 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2004-04-12
New Economics Papers: this item is included in nep-hpe and nep-law
Note: Type of Document - pdf; pages: 42
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Related works:
Journal Article: Why Doesn't Capitalism Flow to Poor Countries? (2009)
Working Paper: Why Doesn't Capitalism Flow to Poor Countries? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpot:0404005

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