Evolution of Risk and Political Regimes

Posted: 4 Feb 2010 Last revised: 2 Oct 2017

See all articles by Maria Petrova

Maria Petrova

Institute for Political Economy and Governance, Barcelona; Catalan Institution of Research and Advanced Studies (ICREA); Universitat Pompeu Fabra; Barcelona Graduate School of Economics (Barcelona GSE); New Economic School (NES)

Robert Bates

Harvard University - Department of Government

Date Written: August 2011

Abstract

The risk of political predation impedes the achievement of economic prosperity. In this paper, we analyze how the risk of predation evolves in different political regimes. Formally, we look at the interaction between a government and citizens in which, in each period, the government has an option to predate. Citizens prefer governments that are competent and non-predatory and strive to replace ones that are not. Regimes differ in the degree to which citizens can succeed in doing so. In pure democracies, citizens can displace incumbent governments; in pure autocracies, they cannot; and in intermediate cases, they can do so in probability. After economic downturns, the posterior probability that the government is competent and benevolent declines. According to the model, in intermediate regimes, but not in others, governments can separate by type. TheOne implication, then, is that these regimes are politically and economically more volatile, with higher levels of variation in assessments of political risk and in economic performance. Another is that in such regimes, political leadership can make an economic difference. Empirically, we test our argument by measuring the impact of economic downturns on the perceived risk of political expropriation in different regime types, using as instruments the incidence of natural disasters and unexpected terms of trade shocks.

JEL Classification: D72, O1

Suggested Citation

Petrova, Maria and Bates, Robert, Evolution of Risk and Political Regimes (August 2011). Available at SSRN: https://ssrn.com/abstract=1547030 or http://dx.doi.org/10.2139/ssrn.1547030

Maria Petrova (Contact Author)

Institute for Political Economy and Governance, Barcelona ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

Catalan Institution of Research and Advanced Studies (ICREA) ( email )

Passeig Lluís Companys, 23
Barcelona, 08010
Spain

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

New Economic School (NES) ( email )

100A Novaya Street
Moscow, Skolkovo 143026
Russia

Robert Bates

Harvard University - Department of Government ( email )

1737 Cambridge Street
Cambridge, MA 02138
United States
617-496-0919 (Phone)
617-496-6849 (Fax)

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