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Kleptocracy and Divide-and-Rule: A Model of Personal Rule

40 Pages Posted: 13 Nov 2003  

Daron Acemoglu

Massachusetts Institute of Technology (MIT) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

James A. Robinson

Harvard University - Department of Government; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Thierry Verdier

Paris School of Economics (PSE); Delta - Ecole Normale Superieure (ENS); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: September 2003

Abstract

Many developing countries have suffered under the personal rule of 'kleptocrats', who implement highly inefficient economic policies, expropriate the wealth of their citizens, and use the proceeds for their own glorification or consumption. The incidence of kleptocracy is a serious impediment to development. Yet how do kleptocrats survive? How can they apparently exploit the entire citizenship of countries and not foment successful opposition? In this research we argue that the success of kleptocrats rests on their ability to use a particular type of political strategy, which we refer to as 'divide-and-rule'. Members of society need to cooperate in order to depose a kleptocrat. A kleptocrat, however, may defuse such cooperation by imposing punitive rates of taxation on any citizen who proposes such a move, and redistributing the benefits to those who need to agree to it. Thus kleptocrats can intensify the collective action problem by threats that remain off the equilibrium path. In equilibrium, all are exploited and no one challenges the kleptocrat because of the threat of divide-and-rule. The divide-and-rule strategy is made possible by the weakness of the institutions in these societies, and highlights the different nature of politics between strongly- and weakly-institutionalized polities. We show that foreign aid and rents from natural resources typically help kleptocratic rulers by providing them with greater resources to buy off opponents. Kleptocratic policies are also more likely to arise when opposition groups are shortsighted and when the average productivity in the economy is low. We also find that greater inequality between producer groups may constrain kleptocratic policies because more productive groups are more difficult to buy off.

JEL Classification: H00, O10

Suggested Citation

Acemoglu, Daron and Robinson, James A. and Verdier, Thierry, Kleptocracy and Divide-and-Rule: A Model of Personal Rule (September 2003). CEPR Discussion Paper No. 4059. Available at SSRN: https://ssrn.com/abstract=467481

Daron Acemoglu (Contact Author)

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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James A. Robinson

Harvard University - Department of Government ( email )

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Centre for Economic Policy Research (CEPR) ( email )

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National Bureau of Economic Research (NBER) ( email )

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Thierry Verdier

Paris School of Economics (PSE) ( email )

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France

Delta - Ecole Normale Superieure (ENS) ( email )

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France
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+33 1 4313 6310 (Fax)

Centre for Economic Policy Research (CEPR)

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London, EC1V 3PZ
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