UC Irvine

The following dissertation consists of three essays. The first addresses Acemoglu et al.(2001)'s Reversal of Fortune institutional hypothesis that more “extractive” institutions were created by the European conquering powers in areas that were relatively wealthy at the time of conquest. These institutions were detrimental to subsequent growth causing a reversal of per capita wealth order. In this essay I develop an alternative explanation for this reversal using a learning-by-doing externality and test it on European and northern Asian countries which had been conquered and ruled by a foreign power since 1500. I find that learning-by-doing technical knowledge accumulation is a more plausible explanation for reversal of fortune than institutional shocks.

The second presents a formal theory which illustrates the path from material prosperity to political liberalism through urbanization. Urbanization and liberalization act as substitute inputs to production of non-elite resistance. Increased urbanization reduces the marginal effect of liberalization as liberalization becomes increasingly redundant. Urban elites therefore have lower costs to weigh against potential benefits when choosing to liberalize. This seeks to contribute to the literature on democratization, providing a theoretical basis to Lipset (1959)'s modernization hypothesis.

The third essay extends McBride and Skaperdas (2006)'s tug-of-war model of conflict with arming costs to arbitrary numbers and structures of conflict states. I explore the model's accommodation of transitions from fighting to bargaining depending on state. I also prove some general properties of these models showing that more balanced opponents will be more likely to bargain under reasonable assumptions.