Emergence and Persistence of Inefficient States

Inhaltsverzeichnis (Table of Contents)

• 1. Introduction
• 1.1. Motivation
• 1.2. Some Historical Observations
• 1.3. Benefits of a Political Economy Approach
• 1.4. Structure of the Thesis
• 2. The Political Economy of Inefficient Institutions
• 2.1. Setting the stage: State Capacity, Inefficiency and Bureaucracy
• 2.1.1. Inefficient Institutions
• 2.1.2. Institutional Change
• 2.1.3. State Capacity
• 2.1.4. Bureaucracy
• 2.2. Inequality, Democratic Transition and the Median Voter Puzzle
• 2.2.1. Initial Inequality and Political Conflict
• 2.2.2. Democratic Transition and Inequality
• 2.2.3. The Median Voter Puzzle
• 2.3. Related Literature
• 2.3.1. Why Societies End Up with Inefficient Institutions
• 2.3.2. Literature on Inefficient States
• 2.3.3. A new Perspective on the Emergence of Inefficient States
• 2.4. Empirical Evidence
• 3. Emergence of Inefficient States under Patronage Politics
• 3.1. Economic and Political Framework
• 3.1.1. Tax Evasion, Effort Decision and State Organization
• 3.1.2. Political System
• 3.2. Timing of Events
• 3.3. Equilibria
• 3.3.1. Constraints and the Government Budget
• 3.3.2. The Comparative Cases: Permanent Democracy and Nondemocracy
• 3.3.3. Emerging Democracy: an Inefficient Equilibrium
• 3.4. Comparative Statics
• 3.4.1. Characteristics of an Inefficient State
• 3.4.2. Inequality and Inefficiency
• 3.4.3. Nondemocracy, Democracy or Emerging Democracy?
• 4. Discussion and Extension
• 4.1. Critical Assumptions and the Inefficient State
• 4.1.1. Agents and Democratic Transition
• 4.1.2. Public Expenditure
• 4.1.3. Taxes
• 4.1.4. Preferences and Inefficiency
• 4.2. More Comparative Statics
• 4.2.1. Excessive Bureaucracy
• 4.2.2. Tax Rates and Inefficiency
• 4.3. Extensions
• 4.3.1. The Middle Class and the Inefficient State
• 4.3.2. Progressive Income Taxation
• 4.3.3. Endogenizing Inefficiency
• 4.3.4. Distribution Costs
• 4.4. Potential and Limits
• 4.4.1. Explaining Inefficient States
• 4.4.2. Limits
• 4.4.3. Contributions to Related Research
• 4.5. Persistence
• 4.5.1. Determinants of Persistence
• 4.5.2. When Inefficient States Persist
• 5. Concluding Remarks

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This master's thesis analyzes the emergence and persistence of inefficient states through an economic theory approach. The work builds upon and extends a model developed by Acemoglu et al. (2011), exploring the political economy dynamics surrounding inefficient institutions and their impact on societal development. The thesis aims to provide a theoretical framework for understanding how inefficient states arise during democratic transitions and why they may persist despite their negative consequences.

• The emergence and persistence of inefficient states during democratic transitions
• The role of patronage politics and rent-seeking in creating and sustaining inefficient institutions
• The interplay of inequality, political power, and the median voter puzzle in shaping institutional outcomes
• The impact of different economic and political factors on the likelihood of an inefficient state emerging and persisting
• The significance of the middle class in influencing the emergence of inefficient states

Zusammenfassung der Kapitel (Chapter Summaries)

Chapter 1 introduces the topic of inefficient states, providing motivation, historical observations, and the benefits of a political economy approach. It also outlines the structure of the thesis.

Chapter 2 delves into the political economy of inefficient institutions, defining key concepts such as state capacity, inefficiency, and bureaucracy. It then examines the role of inequality, democratic transitions, and the median voter puzzle in the emergence of inefficient states.

Chapter 3 presents a model of inefficient state emergence under patronage politics, outlining the economic and political framework, the timing of events, and the equilibrium conditions. It also analyzes the comparative statics of the model, exploring the relationship between inequality, inefficiency, and the emergence of different political regimes.

Chapter 4 discusses the critical assumptions of the model and explores extensions that incorporate a middle class, progressive income taxation, endogenized inefficiency, and distribution costs. This chapter also analyzes the potential and limits of the model for explaining inefficient states and its contributions to related research.

Schlüsselwörter (Keywords)

The main keywords and focus topics of this thesis include inefficient states, patronage politics, democratic transitions, inequality, rent-seeking, state capacity, bureaucracy, median voter puzzle, middle class, and political economy.