Developmental Dictatorship and Middle Class-driven Democratisation

I investigate the motives behind economic growth under a dictatorship, exploring the tradeoff between pursuing higher future gains, which come with growing threats from the demand for democracy from the emerging middle class, and accepting lower gains for a relatively more stable regime. I propose a model where a dictator invests and acquires a rent, citizens educate their children for skilled jobs, and these children adopt democratic values through education. I find that a dictator invests in an underdeveloped economy for future gains. As the economy matures, investment decreases because more citizens get democratic values from higher education. Democracy follows an opposite investment trend: little investment is made when the economy is underdeveloped, but more investment is made as it develops. The analysis is generalised to cases where the dictator is legitimised by higher economic growth than in democracies, and where the dictator oppresses the middle class through high taxation.