Investment, Property Rights and Political Instability: Theory and Evidence
1994 (English)Report (Other academic)
Why do investment rates differ so markedly across countries in the developing world? This paper tries to explain these differences by studying a political model of institutional reform. The model implies that countries with more unstable and polarized political systems will have more inefficient legal systems, resulting in poorly enforced property rights and, thus, lower levels of domestic investment and higher levels of nonmarketable production and capital flight. These predictions of the model hold up when confronted with cross-country data for 101 countries. Extensive sensitivity analysis shows that the empirical results are robust to an ample of prospective statistical problems.
Place, publisher, year, edition, pages
Stockholm: IIES , 1994. , 48 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 574
IdentifiersURN: urn:nbn:se:su:diva-41898OAI: oai:DiVA.org:su-41898DiVA: diva2:342846