The Simple Analytics of Elite Behaviour under Limited State Capacity

François Bourguignon and Thierry Verdier

in The Role of Elites in Economic Development

Published in print September 2012 | ISBN: 9780199659036
Published online January 2013 | e-ISBN: 9780191749032 | DOI:

Series: WIDER Studies in Development Economics

The Simple Analytics of Elite Behaviour under Limited State Capacity

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This chapter discusses the issue of taxation and redistribution in economies dominated by elites with limited state capacity. Within a simple aggregate framework, we discuss the political economy incentives of elites to tax, redistribute, and increase state capacity. In particular, the analysis highlights the role of complementarities or substitutability in the production process between the factors controlled by the elite and other social groups, and shows the existence of natural increasing returns for elites to increase state capacity. The chapter also discusses how the incentives for state capacity building are affected by political threats of power shifting

Keywords: elites; redistribution; political economy; state capacity-building

Chapter.  13316 words.  Illustrated.

Subjects: Economic Development and Growth

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