Alexander Salhi - Michael Bolle
Democracy, Autocracy and Growth: Theoretical Considerations

Abstract:Comparative studies of economic development in democratic and autocratic states are widely popular. However, theoretical foundations of highly sophisticated tool-driven analysis seem vague and sometimes insufficient. This paper tries to shed light on some basic determinants of growth in autocratic and democratic political systems. Although the political system itself does not determine the growth prospects of an economy, different mechanisms translating preferences of actors into policy making are at work. Staying in office is a goal of both democratic and autocratic leaders. A distinct tool available only to autocratic regimes is repression. But authoritarian leaders can be confronted by coups or revolutions from a dissatisfied elite or citizens, while democratic leaders face pressures from the political marketplace translated through elections. Nevertheless, both are measured to some extent by the economic welfare they are supposed to generate either by growth and/or redistribution. This paper attempts to develop a basic understanding of the different constraints on democratic leaders on the one hand and the distorted incentive structure of autocratic leaders in respect to growth enhancing policies on the other. The impact of different factors influencing the incumbents decisions are discussed. We find that impatience of the citizens is a crucial factor often neglected when comparing growth performances of different political systems.

JEL: H11, O43.
Keywords: Autocracy, Democracy, Redistribution, Growth .



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