Key determinants of elite rivalry: theoretical insights and empirical evidence

Abstract

In this paper we empirically examine the key determinants of elite rivalry and identify their main channels of transmission, thus contributing to the sparse literature on the topic. Our results clearly indicate that the income level, human capital, the system of checks and balances, natural resources rents, and colonization experience (or, alternatively, the identity of a country's colonizer) are strong determinants of the observed elite rivalry levels. The determining effect of the first three factors is highly significant and positive, while that of the last two factors is highly significant and negative. These results imply that higher levels of education and income per capita and a more efficient separation of powers contribute to reduce the elite rivalry level, while past experience as a colony and higher rents from natural resources contribute to aggravate it. As regards the transmission channels, the quantification of effects shows that about 60% of the determining factors' overall effect on elite rivalry is transmitted through the legal system and property rights and the political risk channels, mainly coming from the income level and natural resources rents, which cumulatively account for around 45% of the total effect. In sum, our empirical findings indicate that a more efficient institutional model and specific historical and economic factors, can in fact determine the level of elite rivalry in the long run.