SEARCH

SEARCH BY CITATION

Abstract

I analyze the dynamic interaction between civil society organizations and the government in a representative developing economy. Government fails to establish efficient institutions by favoring corruption. On its side, civil society exerts pressure to constrain government to cease corruption. I distinguish between an authoritarian government and an unrestrictive one: the latter does not repress protests from the civil society while the former implements punishment mechanisms. I demonstrate analytically the existence of a unique locally stable equilibrium by solving a linear quadratic differential game for three regimes: respectively, the optimal control problem, noncooperative, and cooperative game. Everything remaining constant; numerical assessment indicates that both civil monitoring and government pressure always increase as the government’s ability to extract rents and the effectiveness of institutions increases. The government pressure also increases with an increase in the marginal utility of rent. Both government pressure and civil society's monitoring effort decrease with the increase in the cooperation weight. Total Factor Productivity effects always dominate the detrimental effect of civil monitoring on growth, except when the government’s capacity of rent extraction increases in the second regime and under some restrictions in the first. In a nutshell, I show that civil society contributes to the improvement of institutions fostering growth.