Self-Serving Dictators and Economic Growth

33 Pages Posted: 28 Jan 2004

See all articles by Daniel Haile

Daniel Haile

Tilburg University

Abdolkarim Sadrieh

University of Magdeburg

Harrie A. A. Verbon

Tilburg University - CentER; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: December 2003

Abstract

A new line of theoretical and empirical literature emphasizes the pivotal role of fair institutions for growth. We present a model, a laboratory experiment, and a simple crosscountry regression supporting this view. We model an economy with an unequal distribution of property rights, in which individuals can free-ride or cooperate. Experimentally we observe a dramatic drop in cooperation (and growth), when inequality is increased by a selfserving dictator. No such effect is observed when the inequality is increased by a fair procedure. Our regression analysis provides basic macroeconomic support for the adverse growth effect of the interaction between the degree and the genesis of inequality. We conclude that economies giving equal opportunities to all are not likely to suffer retarded growth due to inequality in the way economies with self-serving dictators will.

Keywords: inequality, corruption, weak institutions, growth, intentions, dynamic public

JEL Classification: C91, D60, K40, O40, P51

Suggested Citation

Haile, Daniel and Sadrieh, Abdolkarim and Verbon, Harrie A. A., Self-Serving Dictators and Economic Growth (December 2003). Available at SSRN: https://ssrn.com/abstract=486043 or http://dx.doi.org/10.2139/ssrn.486043

Daniel Haile

Tilburg University ( email )

Postbus 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Abdolkarim Sadrieh (Contact Author)

University of Magdeburg ( email )

Faculty of Economics and Management
Postbox 4120
39016 Magdeburg
Germany

HOME PAGE: http://www.ww.uni-magdeburg.de

Harrie A. A. Verbon

Tilburg University - CentER ( email )

Department of Economics
P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 28 78 (Phone)
+31 13 466 30 42 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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