Social Fractionalization, Political Instability, and the Size of Government

IMF Working Papers, April 1, 2000

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Social Fractionalization, Political Instability, and the Size of Government

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Bibliographic details

• Authors: Anthony M Annett
• Published: April 1, 2000
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451850437.001

Summary

• Paper explores the relationship between the degree of division or fractionalization of a country’s population (along ethnolinguistic and religious dimensions) and both political instability and government consumption, using a neoclassical growth model.
• Principal idea: greater fractionalization, proxying for the degree of conflict in society, leads to political instability, which in turn leads to higher government consumption aimed at placating the opposition.
• Feedback mechanism: higher government consumption reduces the risk of losing office and therefore leads to less instability.
• Empirical evidence based on panel estimation supports this hypothesis.

Theoretical framework

• Model type: neoclassical growth model.
• Key mechanisms:
  • Fractionalization → political instability.
  • Political instability → higher government consumption (to placate opposition).
  • Higher government consumption → lower political instability (reduces risk of losing office).

Empirical evidence and methodology

• Empirical approach: panel estimation.
• Main empirical finding: panel estimation supports the theoretical hypothesis that greater social fractionalization increases political instability and government consumption, with a feedback effect from consumption to reduced instability.

Policy implications and interpretation

• Larger government consumption can be an instrument used by governments in more fractionalized societies to reduce political instability by placating opposition groups.
• The interaction between social fractionalization, instability, and government size suggests trade-offs policymakers face between public spending levels and political stability.

Author and publication note

• By Anthony M Annett
• April 1, 2000

https://www.imf.org/en/publications/wp/issues/2016/12/30/social-fractionalization-political-instability-and-the-size-of-government-3558

Content in this bundle

• Social Fractionalization, Political Instability, and the Size of Government - WP/00/82
  • Social Fractionalization, Political Instability, and the Size of Government - WP/00/82 (Markdown version)
  • Social Fractionalization, Political Instability, and the Size of Government - WP/00/82 (PDF)