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

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 entrep...

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Bibliographic Details
Published in:MAGKS - Joint Discussion Paper Series in Economics (Band 14-2010)
Main Authors: Dadasov, Ramin, Harms, Philipp, Lorz, Oliver
Format: Work
Language:English
Published: Philipps-Universität Marburg 2010
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Online Access:PDF Full Text
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Summary: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.
Physical Description:25 Pages
ISSN:1867-3678
DOI:10.17192/es2024.0044