Inefficient predation and political transitions

- Political economic analysis of inefficient predation by autocratic regimes.
- Informational shocks can unexpectedly spark democratic revolutionary movements.
- Revolution over institutional, rather than distributional, grievances.
- Social learning processes may allow for revolutionary waves.
- Economic liberalization and growth required for democratic consolidation.

This paper presents a theory of endogenous economic institutions in non-democracies, where political accountability is enforced through the threat of revolution. We consider a dynamic game between an elite ruling class and a disenfranchised working class, in which workers have imperfect information about the economy's productive possibilities. We characterize the conditions under which (i) the elite implement an inefficient rent-creating economic institution at the risk of provoking a revolution based on institutional grievances, (ii) information shocks can catalyze revolutionary movements that may be contagious among similar countries, and (iii) democratic transitions can be consolidated following revolutionary liberalizations.