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Papers on the Political Regimes, Natural Resources, and Economic Institutions

Bakhshiani, Reza | 2024

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  1. Type of Document: Ph.D. Dissertation
  2. Language: Farsi
  3. Document No: 58367 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Nili, Masoud; Barakchian, Mahdi
  7. Abstract:
  8. The formation of development-supporting economic institutions, particularly through the lens of political institutions, remains a central question in political economy. This study distinguishes two key components of political institutions—power distribution and power transition—and empirically demonstrates that power distribution has a significant positive effect on economic institutional quality, while power transition becomes statistically insignificant once power distribution is controlled for. Based on whether political power is centralized or decentralized and whether its transfer is democratic or non-democratic, we define four political regimes: decentralized democracy, centralized democracy, decentralized dictatorship, and centralized dictatorship. Results indicate that economic institutions perform better under decentralized regimes, whether democratic or dictatorial, compared to centralized ones. While existing literature links natural resource dependence to institutional degradation, this study further differentiates between concentrated (e.g., oil) and diffuse (e.g., agriculture) resources. It finds a significant negative correlation between concentrated resources and institutional quality only in centralized dictatorships; no significant effects emerge in other regimes or for diffuse resources. Although economic institutions in democracies have been widely studied, those in non-democracies remain underexplored. By disaggregating non-democracies into monarchies, personal, single-party, and military dictatorships, findings reveal that monarchies exhibit superior institutional quality. This advantage stems from relatively distributed power within royal families, transparent succession rules, and broad societal coalitions. Robustness checks—including alternative dependent variables, additional controls, sample variations, and instrumental variable approaches—confirm the stability of results and underscore the pivotal role of power distribution (rather than power transition) in shaping economic institutions
  9. Keywords:
  10. Political Institutions ; Political and Economic Institutions ; Power Distribution ; Democracy ; Natural Resource Curse ; Power Transmission ; Autocracy

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