The Political Economy of Social Inclusion
CIRPEE Working Paper No. 12-02
28 Pages Posted: 26 Jan 2012
Date Written: January 24, 2012
We build a political economy model of state policy choice highlighting the challenges to breaking barriers to the adoption of inclusive policies in Africa. We highlight necessary and sufficient conditions for a political leader to gain from implementing exclusive policies: (i) Implementing inclusive policies must be risky; (ii) the political leader must have adequate access to an overseas’ financial safe haven as a technology for protecting the spoils from implementing exclusive policies, or investing the looted funds in the domestic economy must sufficiently contribute to mitigate the risk of a revolution. Our results suggest that breaking barriers to inclusive policies in Africa is not an easy task. Bans on international money-laundering schemes may not be sufficient if domestic money laundering is easy and sufficiently discrete.
Keywords: Inclusive policies, social exclusion, rebellion, financial safe havens, development
JEL Classification: D70, D74, H50
Suggested Citation: Suggested Citation