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World

Web Desk
November 5, 2019

Dr Atif Mian explains the link between political meddling and economic growth

World

Web Desk
Tue, Nov 05, 2019

NEW JERSEY: Renowned Pakistani-American economic professor Dr Atif Mian has explained the link between political meddling and economic growth.

In a series of tweets, on Tuesday, the Princeton University scholar analysed the situation in detail wherein a powerful group (PG), or a foreign country, tries to impose and maintain control over the political affairs of a country.

“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.

“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.

“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.”