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The Role of Socio-Political Institutions in Economic Performance of Developing Countries

Mollaei, Yaser | 2010

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 40726 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Nili, Masoud
  7. Abstract:
  8. Findings of economics in last decade shows that social and economic institutions have direct influence on economic performance of a society. However, these institutions are determined by the state. In different regimes, the political power is in the hand of different social groups with different preferences and goals; as a result, different social and economic policies and institutions are take place in different political regimes. In this research, we study economic performance of a society under control of two different political regimes: in first, the majority rules the state and in second, there is a totalitarian regime in which; the political power is concentrated in hand of a group of people that believe in particular political ideology. In a micro-based study and by considering the difference in preferences and utility function of a homo-economicus and an ideologue individual, we have shown how the policies determined in democracy and a totalitarian regime. The focus is on tax rate, government expenditure, and entry barriers. The results show that external effect of ideological desires for an ideologue makes her to decide a level of investment and production, which is more than what maximize economic profit. In addition, in contrast with democracy, in where there is no entry barrier for new entrepreneurs,totalitarian regime put barriers against entrepreneurship of non-ideologue part of the society. In a static analysis, the model does not show a strict advantage for a political regime in total output and under special circumstances, a political regime may outperform the other.
  9. Keywords:
  10. Economic Growth ; Political Economy ; Developing Countries ; Entry Barriers ; Public Choise

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