Political Economy

Politicans are motivated by

self seeking /opportunistic

partisan

Both views see Politicans and Voters as different entities with different incentives

Leaders matter in terms of economig growth especially in autocracys

scientist economists and enterpreneurs a more liberalization orientated

economic Performance under US Presidents is enhanced by eduction and congerssual experiance

Phsychological Inventice

Economical Incentive

Good Politicans motivated by wage and public service

Baad Politicans motivated by wage and Rent Seeking.

Rent

Market income if not elected

Politicans Wage

Outside income if elected

--> High skilled individuals may shy away if wage as politican is too low. A higher wage may increase the qualitiy of politicans

positive impact on congruence between voters and politicans

positive correlation between wage and governors characteristics

higher wages attract higher qualified candidates

higher wages improve productivity

political party

electoral rule

governement structure

size of governement

degree of political competition

Information

Education

Equality

Social Capital

entry of new firms

lower political instability

smoother governement change

better at coping with external shocks

no effect on economic growth

low private investments

high governement spending

populism

interaction between citizens helps cirtalizing an formin an opposition to a non democratic regime

Once established interaction helps maintain the democracy

participation in civil interaction enhances a feeling of duty and interdependence with others

Interaction enhances the flow of information and helps to form equal expectations which makes behaviour more predictable

Interaction helps creating norms

In the principal agent model elected politicans have incentive for moral hazard and rent seeking, This incentive lowers with better information of the voters (behaviour)

The secend Problem is information about the politicans characteristica like talent. (Adverse selection if limited information)

(part of modernization hypothesis -->education leads to higher level of democracy) Educated people are willing to fight for democracy.

Education teaches people to interact with each other  and helps so builiding up social capital

Education helps citzizens to elect able leaders

Adverse selection problem and moral hazard can be solved by education

High level of income inequality rises the demand for redistribution (Tyranny of majority) This will lead to high taxes low investments an lowe growth.

An efficent democracy (can enforce property rights) can not emerge from societiey with high inequality.

Democracy produces onl better rule of law when inequality is low

commitment issue (commit credible rights to people)

efficent reforms (secure property rights, provide public good, curb corruption)

Contractarien view:

• State solve problems between citicens. State emerges from said problems.
• The State helps to solve the prisoners dilemma in the Steal/Not Steal Game. Focus on conflicts between individuals
• But who watches the watchmen?

Predatorian view:

• State sells safety to citiens. State as the main threat!
• Focus on conflict between individual and State
• State faces same security dilemma like individuals. Extract ressources from others to maintain security

Bottom line

State making is not the intent of rulers but the result. They just try to grap power

Set of people who run the state. Means through which the states power is exercised

Set of rule, norms or institutions that determine how the governement is constituted, organized and major decisions are made.

Substantive view:  Classify in terms of outcomes

Minimalist/procedual view:  Classify in terms of institutions or procedures

Minimalistic/Procedural View

Inclusion: Who gets to participate

Contestation: democratic competition (to which extend ar citizencs organised in competing blocks?)

• contestation and competition
• governemental office is a result of contested elections
• Minimalist view

• The chief executive is elected
• The chief legislative is elected
• There is more than one party competing
• There has been an alternation in power under the same electoral rulse

• Ex ante uncertainty
• Ex Post irreversibility
• Repeatability

Contestation occurs when there is an oppostion that has some chance of winning.

2 scores: Democracy Score - Autocracy Score

Minimalist view

• Competitiveness of executive recruitement
• Openness of executive recruitement
• Executive constraint/decision rules
• Regulation of political participation
• Competitiveness of political participation

• Political rights: richt to vote an compete for office.
• Civil rights: freedom of speach
• substantive view

• Conzeptualization
• Validity
• Reliability
• Replicability

Process of creating mental categories that capture the meaning of events, ideas, objectives

Measure corresponds to the concepts