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Political specialization

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  • Guimaraes, Bernardo
  • Sheedy, Kevin D.

Abstract

This paper presents a theory of political specialization in which some countries uphold the rule of law while others consciously choose not to do so, even though they are ex ante identical. This is borne out of two key insights: for incumbents in each country, (i) the first steps to the rule of law have the greatest private cost, and (ii) steps taken by some countries in the direction of the rule of law make it less attractive for others to follow the same path. The world equilibrium features a symbiotic relationship between despotic and rule-of-law economies: by producing technology-intensive goods that require protection of property rights, rule-of-law economies raise the relative price of natural resources and increase incentives for despotism in other countries; while the choice of despotism entails a positive externality because cheap oil makes the rule of law more attractive elsewhere in the world.

Suggested Citation

  • Guimaraes, Bernardo & Sheedy, Kevin D., 2017. "Political specialization," LSE Research Online Documents on Economics 86164, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:86164
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    File URL: http://eprints.lse.ac.uk/86164/
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    References listed on IDEAS

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    1. Daron Acemoglu & Simon Johnson & James Robinson, 2005. "The Rise of Europe: Atlantic Trade, Institutional Change, and Economic Growth," American Economic Review, American Economic Association, vol. 95(3), pages 546-579, June.
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    Cited by:

    1. Bernardo Guimaraes & Kevin D. Sheedy, 2017. "Guarding the Guardians," Economic Journal, Royal Economic Society, vol. 127(606), pages 2441-2477, November.

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    More about this item

    Keywords

    rule of law; power sharing; international trade; resource curse; development.;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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