The Impact of Financial Integration on Institutions in Autocracies

Konferenzbeitrag

It is often argued that a saticfactory institutional quality is prerequi- site for successfull financial integration. This paper analyzes the influence of financial integration on institutional quality. We construct a dynamic politico-economic model in which the ruling elite uses its political power to expropriate the entrepreneurial class. Although financial integration reduces capital costs for the entrepreneurs and therefore increases their gross profits, the elite counteracts this effect by raising the level of expropriation. Consequently, the net income of entrepreneurs may rise or decline depending on the respective magnitude of the countervailing effects. Since political power is linked to economic resources, financial integration also has consequences for the concentration of power in the hands of the elite and for the rise of the entrepreneurial class.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 ; No. 4

Classification and Topics

• Classification: Wirtschaft ; International Investment; Long-term Capital Movements ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance ; Other Economic Systems: Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
• Subject: Institutions ; Capital Mobility ; Political Economy

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dadasov, Ramin ; Harms, Philipp ; Lorz, Jens Oliver
• Event: Veröffentlichung
• (who): Verein für Socialpolitik, Ausschuss für Entwicklungsländer
• (where): Göttingen
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/39937
• Last update: 10.03.2025, 11:44 AM CET