Cohesive Institutions and the Distribution of Political Rents: Theory and Evidence

Abstract

This paper considers how public resources are distributed across groups and how this depends on the institutional environment. It shows how executive constraints and openness should matter to this and argues that a key role for institutions is to protect politically excluded groups. It develops an approach to judging political insti-tutions based on the idea that cohesive institutions play a role when there is uncertainty about the allocation of political power. Using spatial data on night light, it shows inequality is lower with executive constraints. In addition, politically excluded groups do better within countries when such constraints are in force. Paper prepared for the roundtable on Institutions, Governance and Corruption orga-nized by IEA and RIDGE in Montevideo, Uruguay on May 26-27, 2016. We are grateful to the conference participants, especially our discussant Steve Knack, for comments.