Is financial openness bad for education? A political economy perspective on development

François Bourguignon, Thierry Verdier

Research output: Contribution to journalArticlepeer-review

Abstract

This paper presents a simple model of the links between education, democratization and economic development. In a context of imperfect capital markets, we investigate the incentives for a capitalist oligarchy to subsidize the education of poor workers and to initiate a political transition. It is shown that international financial liberalization, while stimulating physical capital accumulation, reduces the capitalist elite willingness to subsidize domestic human capital accumulation in the medium run. It thus delays, without necessarily impeding the process of democratization. (C) 2000 Elsevier Science B.V. All rights reserved.

Original languageEnglish (US)
Pages (from-to)891-903
Number of pages13
JournalEuropean Economic Review
Volume44
Issue number4-6
DOIs
StatePublished - May 2000

Keywords

  • Democratization
  • Education
  • Openness
  • Political economy

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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