The Economic Foundations of Institutional Stagnation in Commodity-Exporting Countries

CIRPEE Working Paper 10-36

28 Pages Posted: 3 Oct 2010

See all articles by Francis Andrianarison

Francis Andrianarison

affiliation not provided to SSRN

Victor A. B. Davies

African Development Bank

Sylvain Dessy

Université Laval - Département d'Économique

Date Written: September 30, 2010

Abstract

Many poor countries are plagued with growth-impeding institutions. We develop a three-sector general equilibrium model linking economic stagnation in these countries to poor export terms of trade. We examine the extent to which changes in the terms of trade affect private agents’ incentive to coalesce to oppose the adoption of growth-promoting institutions. We show that under certain conditions, below a threshold terms of trade level, private agents gain from coalescing to oppose the adoption of growth-promoting institutions. Above this threshold, gains from coalescing disappear, fostering institutional change.

Keywords: Terms of trade, primary commodities, institutions, general equilibrium

JEL Classification: E02, F11, L12, O33

Suggested Citation

Andrianarison, Francis and Davies, Victor A. B. and Dessy, Sylvain, The Economic Foundations of Institutional Stagnation in Commodity-Exporting Countries (September 30, 2010). CIRPEE Working Paper 10-36. Available at SSRN: https://ssrn.com/abstract=1685269 or http://dx.doi.org/10.2139/ssrn.1685269

Francis Andrianarison

affiliation not provided to SSRN ( email )

Victor A. B. Davies

African Development Bank ( email )

Rue Joseph Anoma
Abidjan, Ivory Coast 01 BP 1387
Ivory Coast (Cote D'ivoire)

Sylvain Dessy (Contact Author)

Université Laval - Département d'Économique ( email )

2325 Rue de l'Université
Ste-Foy, Quebec G1K 7P4 G1K 7P4
Canada

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