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No Better Time Than Now: Future Uncertainty and Private Investment Under Dictatorship

Author

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  • Michael Albertus

    (University of Chicago)

  • Victor Gay

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, IAST - Institute for Advanced Study in Toulouse)

Abstract

Despite received wisdom that long time horizons and formal institutions can induce private investment under dictatorship, there is substantial investment even in relatively unconstrained regimes. This paper provides a novel explanation for the puzzle of investment in these regimes: economic elites' uncertainty over expected investment returns under plausible alternative authoritarian successors. We construct a noisy signaling model that captures how uncertainty over which type of authoritarian successor will rule next and uncertainty in the truthfulness of policy promises made by potential autocratic successors might provide incentives for elite investment.

Suggested Citation

  • Michael Albertus & Victor Gay, 2019. "No Better Time Than Now: Future Uncertainty and Private Investment Under Dictatorship," Post-Print hal-02523101, HAL.
    • Handle: RePEc:hal:journl:hal-02523101
    DOI: 10.1111/ecpo.12120
    Note: View the original document on HAL open archive server: https://hal.science/hal-02523101
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    1. Michael Albertus & Victor Gay, 2017. "Unlikely Democrats: Economic Elite Uncertainty under Dictatorship and Support for Democratization," American Journal of Political Science, John Wiley & Sons, vol. 61(3), pages 624-641, July.
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    Cited by:

    1. François, Abel & Panel, Sophie & Weill, Laurent, 2020. "Educated dictators attract more foreign direct investment," Journal of Comparative Economics, Elsevier, vol. 48(1), pages 37-55.
    2. Abel FRANCOIS & Sophie PANEL & Laurent WEILL, 2018. "Are Some Dictators More Attractive to Foreign Investors?," Working Papers of LaRGE Research Center 2018-05, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    3. Abel FRANCOIS & Sophie PANEL & Laurent WEILL, 2018. "Are Some Dictators More Attractive to Foreign Investors?," Working Papers of LaRGE Research Center 2018-05, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg.
    4. repec:zbw:bofitp:2019_012 is not listed on IDEAS

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