Misallocation of Entrepreneurial Talent in Postconflict Environments

M. Sanders*, U. Weitzel

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Entrepreneurship is generally regarded as a productive force of change, innovation, and development in modern economies. Particularly for institutionally less developed environments, however, it has been argued that the same energy and talent can also be allocated to unproductive ends. In this article, we present a model that analyzes the allocation of entrepreneurial talent into productive activities and raiding in Postconflict environments, where most formal and informal institutions have broken down. We show that the distribution of initial wealth and entrepreneurial talent play a decisive role. Our analysis also suggests that microcredits can support the transition to a productive equilibrium, because they help to overcome credit constraints without creating incentives for raiding.

Original languageEnglish
Pages (from-to)41-64
Number of pages24
JournalJournal of conflict resolution
Volume57
Issue number1
DOIs
Publication statusPublished - 1 Feb 2013
Externally publishedYes

Keywords

  • Bottom-up reconstruction
  • Destructive Entrepreneurship
  • incentives
  • institutions
  • Postconflict regions

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