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This paper applies the logic of economic calculation to the actions of autocrats. We model autocrats as stationary bandits who use profit-and-loss calculations to select institutions that maximize their extraction rents. We find in many cases autocrats achieve rent maximization through creating and protecting private property rights. This in turn yields high levels of production, with expropriation kept low enough to incentivize continued high production. Importantly, while this leads to increasing quantities of available goods and services over time, it does not lead to true development; that is, the coordination of consumer demand with producer supply through directing resources to their highest-valued uses. We apply our model to the authoritarian governments of Singapore and the United Arab Emirates, showing how they function as quasi-corporate governance organizations in the business of maximizing appropriable rents.

The purpose of this paper is to investigate conditions under which voters’ comparison of relative performance between adjacent jurisdictions can help reduce rent‐seeking by politicians.

A theoretical model was developed to examine the effectiveness of yardstick competition in restraining political corruption, first under a static setting, and then under a dynamic setting, using optimal control theory and differential games. It is assumed that voters compare the performance of their incumbent government with that of a neighboring jurisdiction. The incumbent can provide a public good and extract rent, which are financed by imposing a distortionary tax on the population. Politicians derive utility from rent as well as from popularity. The stock of reputation builds up or decays over time. Reputation is decreasing in rent appropriation.

Without assigning an ex ante type on the politician, the paper demonstrates the possibility that yardstick competition itself fails to restrict rent seeking. When the model is extended to a dynamic setting, it is shown that under unitary performance evaluation, dynamic incentives restrain the politician only if the shadow value of reputation (that measures current and future marginal benefits of increased reputation) is sufficiently high throughout the term. it is shown that, for such a high shadow value to exist, benefits of both instantaneous and end‐of‐period reputations have to be high enough. On the other hand, under relative performance evaluation, dynamic incentives impose more restrictions on rent appropriation in comparison to the static case.

This paper offers the first formal analysis, using differential games, of the role of the interaction between electoral considerations and neighborhood demonstration effects (with respect to relative rent extraction) in determining a politician's optimal rent‐seeking behaviour.

Since the mid‐1980s focus has shifted from stabilization to economic growth as a national goal. A large number of studies have been undertaken to explain economic growth. It is intended to show that the current debate between those who claim only institutions matter to economic growth and others who claim that only governance matters is totally unproductive.

Econometric methods are used to evaluate the recent empirical studies on linking the quality of institutions or governance to economic growth.

It is shown that the empirical model specification as well as the estimation methods used by important studies are inappropriate.

Future research needs to incorporate not only the institutions, and governance but also the desire to save, invest and innovate to explain economic growth.

The existing theories of economic growth do not fully capture the complex process of economic growth implying that these theories should not be used as a guide to the screening of developmental aid to the developing countries.

The researchers need to change direction away from data mining and towards developing a better understanding of the growth process. Policy makers should be careful in crafting their policies.

Purpose – Rural–urban divides characterize many violent internecine conflicts. The lack of rural development is often cited as an underlying structural cause of this phenomenon, and thus strengthening rural–urban linkages is often touted as a way of dismantling the structural conditions for internecine violence. This chapter attempts to identify how both the strength and the form of rural–urban linkages influence the intensity of insurgent violence.

Methodology – Using geographic information systems, this chapter analyzes the intensity of specific violent attacks by rural insurgent groups in Maoist India as a function of rural–urban linkages and transportation network redundancy.

Findings – It finds that the degree of interconnectivity in transportation networks is a more robust determinant of restraint among violent actors than the sheer strength of rural–urban linkages. Production networks characterized by highly networked road systems are more likely to incent restrained behavior among rebel groups, which may be dependent on taxation or extortion through obstruction.

Limitations/implications – The chapter quantitatively analyzes a phenomenon, but does not identify causal mechanisms driving it. The policy implication is that providing transportation infrastructure within rural areas may be a more effective guard against insurgent violence than connecting urban and rural areas.

Originality – The chapter makes a methodologically unique link between the large existing literature on rural–urban linkages, and the growing literature on trade networks in violent conflict.

Business corporations (and unincorporated joint-stock companies) formed in Britain and the United States in the eighteenth century and the first half of the nineteenth century were lightly regulated by today’s standards and, as startups, sold equity directly to investors without the aid of intermediaries, yet they suffered relatively few governance breakdowns. That is because republican government-style checks against the arbitrary power of any group of stakeholders (managers, blockholders, directors) suffused their founding documents (charters/constitutions, articles of agreement, bylaws), raising the expected costs of defalcation above the expected benefits. Over the latter half of the nineteenth century, however, the original checks disintegrated. They were functionally replaced twice, first by financial capitalism a la J. P. Morgan, then by corporate raiders and takeover specialists like KKR, but politicians neutralized the first and managers (and judges) the second, leaving many widely held corporations today under the control of CEOs/Board Chairmen who can self-deal with near impunity and have apparent incentives to do so. A return to the precepts of the republican model could help to improve governance outcomes in the future.

Purpose: National business groups in conflict countries may mitigate the civil war or do the converse. When the economy is mainly point-sourced, which means it mainly exports mineral-based products and/or narcotics, the business community (apart from small-businesses associated with services) is likely to be more pro-war, particularly, if the other side may gain control of the lootable commodities, as in secessionist wars. This tendency will be reinforced the closer are business and political ties, shorter the time horizons are and more difficult it is to make credible commitments to peace. If the economy exports mainly agricultural products excluding those mentioned above or manufactures (diffuse or manufacturing) the commercial case for peace is stronger because of the diffused nature of the core business activity. Even so, there will be some groups who profit from war contracts and arms deals. The peace lobby is likely to dominate in societies where business and political actors are more sharply separated, as well as in countries that have longer time horizons and better institutions of commitment. The pro-peace business lobby may have a stronger case in secessionist wars compared to rebellions, as the former are more likely to be longer and more intractable to purely military solutions.

To chart the influence of politics on the future of China’s economy this article draws on the insights of four experts to delineate a range of possibilities.

To better understand the factors at work the author considers the logic and research undergirding four experts’ different views of the unfolding interplay of China’s politics and its economy.

The four vies of China’s political and economic future: (1) A post-democratic future: Eric Li, a venture capitalist, is optimistic that today’s Chinese Communist Party can successfully meet the country’s challenges going forward. (2) China’s trapped transition: Minxin Pei, a professor of government at Claremont McKenna College, worries that political inertia may be coupled with an extended period of economic stagnation. (3) Reform, innovation and growth: Yasheng Huang, a professor of global ei8conomics and management at MIT with deep knowledge of China’s economy and Chinese business, is relatively optimistic, seeing political reform as a potential springboard for continued economic dynamism. (4) The coming Communist Party crackup: David Shambaugh, a professor of international affairs and director of the China policy program at George Washington University, suggests the increasing possibility of a coup and worries about the potential political and economic turmoil associated with such an action.

To really take advantage of its R&D investments, China needs a stronger market-based economic system, a more open and democratic political system, and a rule-based legal system that offers strong intellectual property protection.

The diverse set of possibilities for China’s political and economic future provide executives with a guide for interpreting current events as they play out.

Did the expansion of democratic institutions play a role in determining central government spending behavior in the 19th and 20th centuries? The link between democracy and increased central government spending is well established for the post-Second World War period, but has never been explored during the first “wave of democracy” and its subsequent reversal, that is 1870–1938. The main contribution of this paper is the compilation of a dataset covering 24 countries over this period to begin to address this question. Utilizing various descriptive techniques, including panel data regressions, we explore correlations between central government spending and the institutional characteristics of regimes. We find that the data are consistent with the hypothesis that democracies have a broader need for legitimization than autocracies as various measures of democracy are associated with higher central government spending. Our results indicate that the extension of franchise had a slight positive impact on central government spending levels, as did a few of the other democracy variables. We also find that early liberal democracies spent less and monarchies more than other regimes; debt increases spending; and participation in the Gold Standard reduced government spending substantially.