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Political Instability and Growth in Dictatorships

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  • Jody Overland
  • Kenneth L. Simons
  • Michael Spagat

Abstract

We model growth in dictatorships facing each period an endogenous probability of ``political catastrophe'' that would extinguish the regime's wealth extraction ability. Domestic capital exhibits a bifurcation point determining economic growth or shrinkage. With low initial domestic capital the dictator plunders the country's resources and the economy shrinks. With high initial domestic capital the economy eventually grows faster than is socially optimal.

Suggested Citation

  • Jody Overland & Kenneth L. Simons & Michael Spagat, 2000. "Political Instability and Growth in Dictatorships," William Davidson Institute Working Papers Series 354, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2000-354
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    Cited by:

    1. Lazarev, Valery, 2007. "Political labor market, government policy, and stability of a non-democratic regime," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 546-563, September.
    2. Nobuhiro Mizuno & Katsuyuki Naito & Ryosuke Okazawa, 2017. "Inequality, extractive institutions, and growth in nondemocratic regimes," Public Choice, Springer, vol. 170(1), pages 115-142, January.
    3. Joel Guttman & Rafael Reuveny, 2014. "On revolt and endogenous economic policy in autocratic regimes," Public Choice, Springer, vol. 159(1), pages 27-52, April.
    4. Mare Sarr & Timothy Swanson, 2012. "Corruption and the Curse: The Dictator's choice," CIES Research Paper series 17-2012, Centre for International Environmental Studies, The Graduate Institute.
    5. Angus Chu, 2010. "Nation states vs. united empire: Effects of political competition on economic growth," Public Choice, Springer, vol. 145(1), pages 181-195, October.
    6. Georgy Egorov & Konstantin Sonin, 2011. "Dictators And Their Viziers: Endogenizing The Loyalty–Competence Trade‐Off," Journal of the European Economic Association, European Economic Association, vol. 9(5), pages 903-930, October.
    7. Mare Sarr & Erwin Bulte & Chris Meissner & Tim Swanson, 2011. "On the looting of nations," Public Choice, Springer, vol. 148(3), pages 353-380, September.
    8. Christopher J. Ellis & John Fender, 2014. "Public Sector Capital and the Transition from Dictatorship to Democracy," Manchester School, University of Manchester, vol. 82(3), pages 322-346, June.
    9. Besley, Timothy J. & Kudamatsu, Masayuki, 2007. "Making Autocracy Work," CEPR Discussion Papers 6371, C.E.P.R. Discussion Papers.
    10. Kenneth S. Chan & Jean-Pierre Laffargue, 2014. "The Growth and Decline of the Modern Sector and the Merchant Class in Imperial China," Review of Development Economics, Wiley Blackwell, vol. 18(1), pages 13-28, February.
    11. Temple, Jonathan R.W., 2010. "Aid and Conditionality," Handbook of Development Economics, Elsevier.
    12. Daron Acemoglu & Tarek A. Hassan & Ahmed Tahoun, 2014. "The Power of the Street: Evidence from Egypt's Arab Spring," NBER Working Papers 20665, National Bureau of Economic Research, Inc.
    13. Giuriato, Luisa, 2008. "Combining autocracy and majority voting: the canonical succession rules of the Latin Church," MPRA Paper 15164, University Library of Munich, Germany.
    14. Gregory, Paul R. & Schröder, Philipp J.H. & Sonin, Konstantin, 2011. "Rational dictators and the killing of innocents: Data from Stalin's archives," Journal of Comparative Economics, Elsevier, vol. 39(1), pages 34-42, March.
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    16. Tommaso Nannicini & Roberto Ricciuti, 2010. "Autocratic Transitions and Growth," CESifo Working Paper Series 2967, CESifo Group Munich.
    17. Temple, Jonathan, 2001. "Growing into Trouble: Indonesia After 1966," CEPR Discussion Papers 2932, C.E.P.R. Discussion Papers.
    18. Konstantin Sonin & Georgy Egorov, 2011. "Incumbency Advantage in Nondemocratic Elections," 2011 Meeting Papers 417, Society for Economic Dynamics.
    19. Christopher J. Ellis & John Fender, 2008. "Democratic Errors," University of Oregon Economics Department Working Papers 2008-2, University of Oregon Economics Department.
    20. Jørgen Andersen, 2012. "Costs of taxation and the size of government," Public Choice, Springer, vol. 153(1), pages 83-115, October.
    21. Thampanishvong Kannika, 2012. "Provision of Public Goods with the Presence of Inter-Class Conflicts," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 18(1), pages 1-29, April.
    22. Mare Sarr & Timothy Swanson & Chiara Ravetti & Siri Wingaard, 2012. "Aiding and Abetting the Looting of Nations: The impact of Aid on growth in Autocracies," CIES Research Paper series 15-2012, Centre for International Environmental Studies, The Graduate Institute.
    23. Ronen Bar-El, 2009. "Dictators, development, and the virtue of political instability," Public Choice, Springer, vol. 138(1), pages 29-44, January.
    24. Yuan K. Chou & Hayat Khan, 2004. "Explaining Africa's Growth Tragedy: A Theoretical Model of Dictatorship and Kleptocracy," Department of Economics - Working Papers Series 922, The University of Melbourne.

    More about this item

    Keywords

    dictatorship; growth; political economy; bifurcation;

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H - Public Economics

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