In recent years, we have witnessed governments enjoying the loyalty and support of their armies and police forces while their bureaucracies choose to terminate their rule and initiate a transition to democracy. This study will argue that the decision to democratize is neither surprising nor inevitable; it is an action of deliberate political and economic choice. The project will develop a series formal models that capture the incentives facing the leadership of these autocratic regimes and the decision problems faced by competing and contesting groups in pursuit of benefits that may accrue under a transition. The models will focus on the interaction of agents in economies where there is both resource dissipating conflict (property rights are not perfectly secure generating `contest`) and market driven production and trade. The decision to transit between regimes is determined in equilibrium, and the conditions under which a regime shift will occur are to be established. The project will (1) identify a number of crucial economic and political variables as important determinants of the decision taken by a ruling elite to transit between regimes; (2) develop analytical methods and models for understanding institutional changes and regime transitions; (3) study the South African transition in detail not merely as an attempt to understand the forces driving that society towards democracy, but to provide some insights as to how conflicts world wide that are driven by identity politics can be directed towards democratic solutions; Finally, (4) the predicted equilibrium outcomes are to be tested against data from the South African experience. This project will contribute to an understanding of institutional change, democratization, and the economic forces operating in ethnically divided societies.
