The autocratic gamble: evidence from robust variance tests
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The autocratic gamble: evidence from robust variance tests Fabio Monteforte1 · Jonathan R. W. Temple Received: 6 November 2019 / Accepted: 1 October 2020 / Published online: 27 October 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract This paper examines whether autocracy is a gamble. Using robust variance tests and other analyses, we find that long-term growth varies more across autocracies than across democracies. This remains true even when richer countries are excluded from the sample. We also investigate channels, to see if the higher variance of growth outcomes across autocracies can be traced to a higher variance in investment ratios or productivity growth. Overall, the paper’s findings suggest that growth prospects are more uncertain for autocracies than democracies, and especially for closed autocracies. From the viewpoint of a domestic population, autocracy remains a gamble. Keywords Democracy · Autocracy · Economic growth · Robust variance tests JEL Classification H11 · O40 · O43
1 Introduction The number of democracies in the world was broadly steady, or expanded, every year between 1975 and 2007 (Diamond 2015). But after this point, the unprecedented expansion of freedom and democracy ceased. There was no net expansion in the number of electoral democracies, and even an incipient decline, or what Diamond terms a ‘democratic recession’. The economic consequences of this are uncertain, since the roles of political rights and institutions in growth remain debated. Some autocracies may be insulated from lobbying and other political pressures, and able to make long-term decisions that might be unpopular in the short run but effective in the long run (Olson 1993). This argument generally appeals to successful growth episodes under periods of autocracy: China, Indonesia, Singapore or * Fabio Monteforte [email protected] Jonathan R. W. Temple [email protected] http://www.jontemple.org.uk/ 1
Department of Economics, University of Messina, Via dei Verdi 75, 98122 Messina, Italy
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South Korea, or more recently, Ethiopia. But there is an obvious problem with this approach, which is that many autocracies have a weak growth record.1 For a domestic population - who often have little say in the matter - autocracy could be a risky gamble with their prospects, relative to democracy.2 Sah (1991) and Weede (1996) may have been among the first to consider this question. Przeworski et al. (2000, p. 177) showed that most growth miracles and growth disasters occurred under dictatorships. Later work by Almeida and Ferreira (2002) also found that growth outcomes have been more variable across autocracies than across democracies, but in most of their analyses, the data ended in 1989. Others to consider variation by regime type include Rodrik (1997), Glaeser et al. (2004), Besley and Kudamatsu (2008), Knutsen (2018), and Luo and Przeworski (2019). This paper revisits the question using the latest available data, spanning more t
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