Scandinavian Working Papers in Economics

Research Papers in Economics,
Stockholm University, Department of Economics

No 2011:22: The Dual Policy in the Dual Economy - The Political Economy of Urban Bias in Dictatorial Regimes

Abdulaziz Shifa ()
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Abdulaziz Shifa: Dept. of Economics, Stockholm University, Postal: Department of Economics, Stockholm University, S-106 91 Stockholm, Sweden

Abstract: One of the most common policy obstacles in the global effort against poverty is what is termed as “urban bias” where rural residents, who constitute majority of the poor in the world, face systematic bias against their economic interests by their own governments. This paper develops a simple political economy model of urban bias in dictatorial regimes. Equilibrium outcomes relating policy outcomes with economic structure, political power, and other behavioral and structural variables are analyzed. The model shows that anti-agricultural biases can emerge in primarily agrarian societies even if there is no bias in political power between urban and rural citizens. Evidence from recent World Bank country level panel data on biases against/for agriculture provides support for the model’s prediction.

Keywords: Urban bias; rural poverty; dictatorship

JEL-codes: D72; O17; O20; P48; R00

24 pages, May 15, 2011

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