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Investment without democracy: Ruling-party institutionalization and credible commitment in autocracies

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  • Gehlbach, Scott
  • Keefer, Philip

Abstract

What explains private investment in autocracies, where institutions that discourage expropriation in democracies are absent? We argue that institutionalized ruling parties allow autocrats to make credible commitments to investors. Such parties promote investment by solving collective-action problems among a designated group, who invest with the expectation that the autocrat will not attempt their expropriation. We derive conditions under which autocrats want to create such parties, and we predict that private investment and governance will be stronger in their presence. We illustrate the model by examining the institutionalization of the Chinese Communist Party.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 39 (2011)
Issue (Month): 2 (June)
Pages: 123-139

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Handle: RePEc:eee:jcecon:v:39:y:2011:i:2:p:123-139

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Web page: http://www.elsevier.com/locate/inca/622864

Related research

Keywords: Investment Dictatorship Ruling parties Credible commitment;

References

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Citations

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Cited by:
  1. Andrei Govorun & Israel Marques & William Pyle, 2013. "The political roots of intermediated lobbying: evidence from Russian firms and business associations," HSE Working papers WP BRP 46/EC/2013, National Research University Higher School of Economics.
  2. Li, Yuan & Gilli, Mario, 2014. "Accountability in Autocracies: The Role of Revolution Threat," Working Paper Series 2014-30, Stockholm China Economic Research Institute, Stockholm School of Economics, revised 06 Mar 2014.
  3. Giacomo De Luca & Anastasia Litina & Petros G. Sekeris, 2012. "Growth-Friendly Dictatorships," Working Papers 1209, University of Namur, Department of Economics, revised Sep 2012.
  4. Israel Marques & Eugenia Nazrullaeva & Andrei Yakovlev, 2011. "From Competition to Dominance: Political Determinations of Federal Transfers in Russian Federation," HSE Working papers WP BRP 12/EC/2011, National Research University Higher School of Economics.
  5. Libman, Alexander, 2013. "Natural resources and sub-national economic performance: Does sub-national democracy matter?," Energy Economics, Elsevier, vol. 37(C), pages 82-99.
  6. Fredriksson, Per G. & Neumayer, Eric, 2013. "Democracy and climate change policies: Is history important?," Ecological Economics, Elsevier, vol. 95(C), pages 11-19.

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