Acemoglu's Model and the Reality: Dynamics of Economic and Political Power in the Former Soviet Union Countries by Gohar Yeranyan

Author:Gohar Yeranyan [Yeranyan, Gohar]
Language: eng
Format: epub
ISBN: 9783937642468
Google: OMvsoAEACAAJ
Amazon: B00GUGVS8Q
Barnesnoble: B00GUGVS8Q
Goodreads: 24798198
Publisher: Libertas
Published: 2013-01-15T06:12:01+00:00

THE ROLE OF INCENTIVES

FOR THE POLITICAL AND ECONOMIC CHANGE

After constructing this model, Acemoglu & Robinson (2006a) don’t come to the conclusion that changes in political institutions and thus de jure political power may necessarily change the distribution of de facto political power. Thus, they construct a model which renders this. A verbal explanation of this model may be the assumption that even if the elite which have monopolized de jure political power loses it, it may still maintain de facto political power by increasing the intensity of their collective action. They may use brute force, do bribing etc. and ensure the existence of the previous set of economic institutions. So, the model represents that change in one dimension of political institutions such as the shift from non-democracy to democracy may be not sufficient for changes in economic institutions, because multidimensional changes are needed. So they (Acemoglu & Robinson, 2006a) argue that persistence of economic institutions happens not due to persistence of political institutions, but due to the persistence of the incentives of whoever holds the power. The economic institutions are always able to persist even after changes in political institutions, because the incentives of the elite haven’t been changed and it still uses the power on their own sake.

Developing this model they (Acemoglu & Robinson, 2006b) try to explain the reasons of economic backwardness from political perspective. They argue that if everything else equal, the political elite will adopt changes in economic institutions and new technologies, because these will increase the overall output and they will benefit because of increased output and additional revenues. However, it is not always the case that political elite prefer changes in economic institutions. The reason is that such change may challenge their political power by enriching other groups and making them powerful enough to fight against the elite. So, there is a trade off to adopt or not to adopt changes, and the elite may prefer not adoption in some cases. The situation is pretty different when there is a political competition. The elite are innovating because there are high chances that they will get replaced. The elite also innovate when it is highly entrenched, because it will not lose its power, anyway. After constructing a model and discussing the possible outcomes, Acemoglu & Robinson (2006b) show that adopting of the changes is more likely when the elite are either competitive or highly entrenched. In cases, when political competition is limited the elite will block the change. The elite are also more likely to block the change when the stakes are higher. That is: it enjoys high revenues, and the external threats are absent. If the external threats are high, the elite are forced to innovate, because, being technologically weak, a state becomes pretty vulnerable to be put under pressure.

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