In this paper we present a kinetic model with evolutive stochastic game-type interactions, analyzing the relationship between the level of political competition in a society and the degree of economic liberalization. The above issue regards the complex interactions between economy and institutional policies intended to introduce technological innovations in a society, where technological innovations are intended in a broad sense comprehending reforms critical to production [3]. A special focus is placed on the political replacement effect described in a macroscopic model by Acemoglu and Robinson (AR-model [1], henceforth), which can determine the phenomenon of innovation 'blocking', possibly leading to economic backwardness. One of the goals of our modelization is to obtain a mesoscopic dynamical model whose macroscopic outputs are qualitatively comparable with stylized facts of the AR-model and the comparison is settled in a number of case studies. A set of numerical solutions is presented showing the non monotonous relationship between economic liberalization and political competition in particular conditions, which can be considered as an emergent phenomenon of the analyzed complex socio-economic interaction dynamics.

According to standard economic theory, human beings are expected to work more and better when benefits in the form of lower costs or higher reward increase. Principal–agent theory applied to the theory of the firm relies on this relationship and states that employees should be paid according to how well they perform their tasks. In this framework, monitoring devices are introduced to control employees’ performance and determine salaries. In this paper we construct a principal–agent model to describe the relationship between citizens/voters and elected representatives in which monitoring devices are introduced to control the performance of the latter. We demonstrate that tighter controls may produce better performance but also may produce a reduction in the intrinsic motivations of elected representatives, resulting in a reduction of their work effort. These results are interpreted in the light of the motivation crowding theory.

This paper explores the complex interplay between political systems, foreign direct investment (FDI), and income inequality. Building on Acemoglu and Robinson’s Nobel Prize-winning work on institutions, we develop a framework to analyze governments’ political incentives to attract FDI. We argue that highly entrenched autocracies, facing little internal competition for rents, and democracies with strong political competition, eager to secure growth for electoral advantage, exhibit strong incentives to attract FDI. In contrast, weaker autocracies with internal competition for rents and entrenched democracies, where rulers face less pressure to deliver growth, have lower incentives to do so. Rising inequality introduces an additional layer of complexity: while democracies may encounter public resistance to FDI when its benefits are perceived as unevenly distributed, autocracies remain less constrained by public opinion. We analyze data from 144 countries spanning 1990–2018, assessing how political incentives shape FDI inflows and their subsequent impact on economic growth. Our findings suggest that in democracies, robust political competition underpins a country’s incentive to remain attractive to investors, while autocracies require regulatory stability and credible long-term commitments to achieve this outcome. Ultimately, our research underscores a paradox—democratic freedoms, though vital, may at times hinder economic competitiveness relative to autocratic regimes.