1/ A thread on political meddling and economic growth.
Suppose there is a powerful group (PG), or a foreign country, that is trying to impose and maintain control over the political affairs of a country.
Suppose there is a powerful group (PG), or a foreign country, that is trying to impose and maintain control over the political affairs of a country.
2/ Ideally PG would like to enter into a long-term agreement with a political party along the lines: "we'll support you to stay in power, if you do xyz for us".
But the problem is commitment. Once in power, the political party may do whatever it likes.
But the problem is commitment. Once in power, the political party may do whatever it likes.
3/ Hence the need for keeping them on a "leash", which PG does by also supporting the opposing party just enough to keep the probability of a party staying in power always 50/50.
But 50/50 strategic rule also maximizes uncertainty.
But 50/50 strategic rule also maximizes uncertainty.
4/ In fact if PG is strong enough, the only thing market knows for sure is that there will never be a stable government.
This keeps long-term investment at bay, and the country has a hard time growing.
I suspect this applies to many countries.
This keeps long-term investment at bay, and the country has a hard time growing.
I suspect this applies to many countries.
