Institutional quality and the wealth of autocrats
Main Article Content
Abstract
One frequently given explanation for why autocrats maintain corrupt and inefficient institutions is that the autocrats benefit personally even though the citizens of their countries are worse off. The empirical evidence does not support this hypothesis. Autocrats in countries with low-quality institutions do tend to be wealthy, but typically, they were wealthy before they assumed power. A plausible explanation, consistent with the data, is that wealthy individuals in countries with inefficient and corrupt institutions face the threat of having their wealth appropriated by government, so have the incentive to use some of their wealth to seek political power to protect the rest of their wealth from confiscation. While autocrats may use government institutions to increase their wealth, autocrats in countries with low-quality institutions tend to be wealthy when they assume power, because wealthy individuals have the incentive to use their wealth to acquire political power to protect themselves from a potentially predatory government.
Keywords:
Downloads
Article Details
References
Acemoglu, D., & Robinson, J.A. (2006). Economic Backwardness in Political Perspective. American Political Science Review, 100(1), 115-131. https://doi.org/10.1017/s0003055406062046
Acemoglu, D., & Robinson, J.A. (2013). Economics versus Politics: Pitfalls of Policy Advice. Journal of Economic Perspectives, 27(2), 173-192. https://doi.org/10.1257/jep.27.2.173
Ayittey, G.B.N. (2008). The African Development Conundrum. In B. Powell (Ed.), Making Poor Nations Rich: Entrepreneurship and the Process of Economic Development (pp. 137-188). Stanford: Stanford Business and Finance.
Baumol, W.J. (1990). Entrepreneurship: Productive, unproductive, and destructive. Journal of Political Economy, 98(5), 893-921. https://doi.org/10.1086/261712
Berggren, N. (2003). The Benefits of Economic Freedom: A Survey. Independent Review, 8(2), 193-211. https://doi.org/10.4337/9781784718237.00009
Coyne, C.J. (2013). Doing Bad by Doing Good: Why Humanitarian Action Fails. Stanford: Stanford University Press.
De Haan, J., Lundstrom, S., & Sturm, J. (2006). Market-Oriented Institutions and Economic Growth: A Critical Survey. Journal of Economic Surveys, 20(2), 157-191. https://doi.org/10.1111/j.0950-0804.2006.00278.x
Diamond, J. (1997). Guns, Germs, and Steel. New York: W.W. Norton & Company.
Easterly, W. (1997). The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good. New York: Penguin.
Faria, H.J., & Montesinos, H.M. (2009). Does Economic Freedom Cause Prosperity?: An IV Approach. Public Choice, 141(1-2), 103-127. https://doi.org/10.1007/s11127-009-9440-0
Gwartney, J., Lawson, R., & Hall, J. (2012). Economic Freedom of the World, 2012 Report. Vancouver, BC: Fraser Institute.
Holcombe, R.G., & Boudreaux, C.J. (2013). Institutional Quality and the Tenure of Autocrats. Public Choice, 156(3-4), 409-421. https://doi.org/10.1007/s11127-013-0089-3
Holcombe, R.G., & Rodet, C.S. (2012). Rule of Law and the Size of Government. Journal of Institutional Economics, 8(1), 49-69. https://doi.org/10.1017/s1744137411000348
Landes, D.S. (1998). The Wealth and Poverty of Nations: Why Some are So Rich, and Some So Poor. New York: W.W. Norton.
Mokyr, J. (1990). The Lever of Riches. Oxford: Oxford University Press.
Olson, M., Jr. (1982). The Rise and Decline of Nations. New Haven: Yale University Press.
Olson, M., Jr. (1996). Big Bills Left on the Sidewalk: Why Some Nations Are Rich, and Others Poor. Journal of Economic Perspectives, 10(2), 3-24. https://doi.org/10.1093/0198294905.003.0002
Rodrik, D. (2014). When Ideas Trump Interests: Preferences, Worldviews, and Policy Innovations. Journal of Economic Perspectives, 28(1): 189-208. https://doi.org/10.1257/jep.28.1.189
Sachs, J.D. (2001). Tropical Underdevelopment. NBER Working Paper 8119. https://doi.org/10.3386/w8119
Winters, J.A. (2011). Oligarchy. Cambridge: Cambridge University Press.