Regions, political economics and economic performance

What drives economic performance? Which are the main factors accounting for the large observed income disparities across countries and within countries themselves? These issues date back to the Industrial Revolution. Some countries have then developed very rapidly creating an unprecedented income gap. Some others have later caught up with the richest nations at an impressive speed while a large number of countries have seemed to be doomed to poverty. Even within countries, there are important differences of development. How to explain this variety of development patterns? These questions have been the research agenda of an extensive empirical and theoretical literature on economic growth and economic development. Among the new developments of the last twenty years, some have addressed these issues with regional and institutional viewpoints. The objective of this thesis is to consider the regional and the political economics levels to provide some insights on this variety of development patterns. Regional economics and political economics constitute two different levels of inquiry to highlight determinants of economic performance. Since regions generally share common institutions, especially political institutions, regional economics narrows the set of possible determinants to factor prices, preferences and technological arguments. In contrast, political economics focuses on the constraints and incentives applying to individuals at the national level. For all the chapters, the methods used are theoretical. The first chapter examines income regional disparities in economies with a non-negligible traditional sector. The second chapter studies consumption habits as a possible source of reversals of fortune. The third chapter suggests a theoretical framework to account for the interplay between dictatorial rule, economic performance and stability. Finally, the last chapter is a preliminary work on the macroeconomic effect of political institutions under uncertainty by exploring saving and investment decisions under particular uncertainty settings.