Hostname: page-component-8448b6f56d-tj2md Total loading time: 0 Render date: 2024-04-19T21:58:31.369Z Has data issue: false hasContentIssue false
  • English
  • Français

The dictator effect: how long years in office affect economic development

Published online by Cambridge University Press:  15 August 2014

KOSTADIS J. PAPAIOANNOU  and
JAN LUITEN VAN ZANDEN
KOSTADIS J. PAPAIOANNOU*
Affiliation:
Department of Social and Economic History, Utrecht University, Utrecht, the Netherlands
JAN LUITEN VAN ZANDEN
Affiliation:
Department of Social and Economic History, Utrecht University, Utrecht, the Netherlands
*
*Email: kostadis.papaioannou@wur.nl
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper contributes to the growing literature on the links between political regimes and economic development by studying the effects of years in office on economic development. The hypothesis is that dictators who stay in office for a long time period will find it increasingly difficult to carry out sound economic policies. We argue that such economic policies are the result of information asymmetries inherent to dictatorships (known as the ‘dictator dilemma’) and of changes in the personality of dictators (known as the ‘winner effect’). We call the combination of these two terms the ‘dictator effect’. We present evidence to suggest that long years in office impacts on economic growth (which is reduced), inflation (which increases) and the quality of institutions (which deteriorates). The negative effect of long years of tenure (i.e. the ‘dictator effect’) is particularly strong in young states and in Africa and the Near East.

Type
Research Article
Information
Journal of Institutional Economics , Volume 11 , Issue 1 , March 2015 , pp. 111 - 139
Copyright
Copyright © Millennium Economics Ltd 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. (2003), ‘Why not a Political Coase Theorem? Social Conflict, Commitment, and Politics’, Journal of Comparative Economics, 31 (4): 620–652.Google Scholar
Acemoglu, D. (2006), Economic Origins of Dictatorship and Democracy, Cambridge: Cambridge University Press.Google Scholar
Acemoglu, D., Johnson, S., and Robinson, J. A. (2005), ‘Institutions as a Fundamental Cause of Long-Run Growth’, in Anghion, P. and Durlauf, S. N. (eds.), Handbook of Economic Growth, Amsterdam: North Holland, 1: 385–472.Google Scholar
Afonso, A. and Furceri, D. (2010), ‘Government Size, Composition, Volatility and Economic Growth’, European Journal of Political Economy, 26 (4): 517–532.CrossRefGoogle Scholar
Aisen, A. and Veiga, F. J. (2006), ‘Does Political Instability Lead to Higher Inflation? A Panel Data Analysis’, Journal of Money, Credit and Banking, 38 (5): 1379–1389.CrossRefGoogle Scholar
Aisen, A. and Veiga, F. J. (2013), ‘How Does Political Instability Affect Economic Growth?’, European Journal of Political Economy, 29: 151–167.CrossRefGoogle Scholar
Alesina, A. (1997), Political Cycles and the Macroeconomy, Cambridge, MA: MIT Press.CrossRefGoogle Scholar
Alesina, A., Devleeschauwer, A., Easterly, W., Kurlat, S., and Wacziarg, R. (2003), ‘Fractionalization’, Journal of Economic Growth, 8 (2): 155–194.Google Scholar
Alvarez, M., Cheibub, J. A., Limongi, F., and Przeworski, A. (1996), ‘Classifying Political Regimes’, Studies in Comparative International Development, 31 (2): 3–36.Google Scholar
Arellano, M. and Bond, S. (1991), ‘Some Tests of Specification for Panel Data: Monte Carlo Evidence and An Application to Employment Equations’, The Review of Economic Studies, 58 (2): 277–297.CrossRefGoogle Scholar
Baker, M., Bulte, E., and Weisdorf, J. (2010), ‘The Origins of Governments: From Anarchy to Hierarchy’, Journal of Institutional Economics, 6 (2): 215–242.Google Scholar
Barro, R. J. (1991), ‘Economic Growth in a Cross Section of Countries’, The Quarterly Journal of Economics, 106 (2): 407–443.Google Scholar
Barro, R. J. (1996a), ‘Democracy and Growth’, Journal of Economic Growth, 1 (1): 1–27.CrossRefGoogle Scholar
Barro, R. J. (1996b), Determinants of Economic Growth: A Cross-Country Empirical Study, National Bureau of Economic Research.CrossRefGoogle Scholar
Barro, R. J. and Lee, J. W. (2001), ‘International Data on Educational Attainment: Updates and Implications’, Oxford Economic Papers, 53 (3): 541–563.Google Scholar
Beck, T., Clarke, G., Groff, A., Keefer, P., and Walsh, P. (2001), ‘New Tools in Comparative Political Economy: The Database of Political Institutions’, The World Bank Economic Review, 15 (1): 165–176.Google Scholar
Bjørnskov, C., Dreher, A., and Fischer, J. A. (2007), ‘The Bigger the Better? Evidence of the Effect of Government Size on Life Satisfaction Around the World’, Public Choice, 130 (3–4): 267–292.Google Scholar
Blanchard, O. J. (1986), ‘The Wage Price Spiral’, The Quarterly Journal of Economics, 101 (3): 543–565.CrossRefGoogle Scholar
Block, S. A. (2002), ‘Political Business Cycles, Democratization, and Economic Reform: The Case of Africa’, Journal of Development economics, 67 (1): 205–228.CrossRefGoogle Scholar
Boix, C. (2003). Democracy and Redistribution, Cambridge: Cambridge University Press.Google Scholar
Bond, S., Hoeffler, A., and Temple, J. (2001), GMM Estimation of Empirical Growth Models (Vol. 3048), Centre for Economic Policy Research London.Google Scholar
Bond, S. R. (2002), ‘Dynamic panel data models: a guide to micro data methods and practice’, Portuguese Economic Journal, 1 (2): 141–162.CrossRefGoogle Scholar
Bratton, M., Van de Walle, N., and Lange, P. (1997), Democratic Experiments in Africa: Regime Transitions in Comparative Perspective, Cambridge: Cambridge University Press.Google Scholar
Chang, E. and Golden, M. A. (2010), ‘Sources of Corruption in Authoritarian Regimes*’, Social Science Quarterly, 91 (1): 1–20.CrossRefGoogle Scholar
Chang, H. J. (2011), ‘Institutions and Economic Development: Theory, Policy and History’, Journal of Institutional Economics, 7 (4): 473–498.Google Scholar
Charron, N. and Lapuente, V. (2011), ‘Which Dictators Produce Quality of Government?’, Studies in Comparative International Development, 46 (4): 397–423.CrossRefGoogle Scholar
Collier, P. and Hoeffler, A. (2005), ‘Resource Rents, Governance, and Conflict’, Journal of Conflict Resolution, 49 (4): 625–633.CrossRefGoogle Scholar
Dreher, A. (2006), ‘Does Globalization Affect Growth? Evidence from a New Index of Globalization’, Applied Economics, 38 (10): 1091–1110.Google Scholar
Easterly, W., Ritzen, J., and Woolcock, M. (2006), ‘Social Cohesion, Institutions, and Growth’, Economics & Politics, 18 (2): 103–120.Google Scholar
Ellman, M. (2008), ‘The Political Economy of Stalinism in the Light of the Archival Revolution’, Journal of Institutional Economics, 4 (1): 99–125.Google Scholar
Frankel, J. A. and Romer, D. H. (1999), ‘Does Trade Cause Growth?’, American Economic Review, 89 (3): 379–399.Google Scholar
Gandhi, J. (2008), Political Institutions under Dictatorship: Cambridge University Press New York.Google Scholar
Gandhi, J. and Przeworski, A. (2006), ‘Cooperation, Cooptation, and Rebellion under Dictatorships’, Economics & Politics, 18 (1): 1–26.Google Scholar
Geddes, B. (1999), ‘What do We Know about Democratization after Twenty Years?’, Annual Review of Political Science, 2 (1): 115–144.Google Scholar
Geddes, B. (2003), Paradigms and Sand Castles: Theory Building and Research Design in Comparative Politics, University of Michigan Press.Google Scholar
Glaeser, E. L., La, R. Porta, Lopez-de-Silanes, F., and Shleifer, A. (2004), ‘Do Institutions Cause Growth?’, Journal of Economic Growth, 9 (3): 271–303.Google Scholar
Goemans, H. E., Gleditsch, K. S., and Chiozza, G. (2009), ‘Introducing Archigos: A Dataset of Political Leaders’, Journal of Peace Research, 46 (2): 269–283.Google Scholar
Grabowski, R. (2008), ‘Modes of Long-Run Development: Latin America and East Asia’, Journal of Institutional Economics, 4 (1): 25–50.Google Scholar
Grier, K. B. and Tullock, G. (1989), ‘An Empirical Analysis of Cross-National Economic Growth, 1951–1980’, Journal of Monetary Economics, 24 (2): 259–276.CrossRefGoogle Scholar
Gruenfeld, D. H., Inesi, M. E., Magee, J. C., and Galinsky, A. D. (2008), ‘Power and the Objectification of Social Targets’, Journal of Personality and Social Psychology, 95 (1): 111–127.Google Scholar
Hayakawa, K. (2012), ‘The Asymptotic Properties of the System GMM Estimator in Dynamic Panel Data Models when Both N and T are Large’, Available at SSRN 1412035.CrossRefGoogle Scholar
Hesse, H. and Poghosyan, T. (2009), ‘Oil Prices and Bank Profitability: Evidence from Major Oil-Exporting Countries in the Middle East and North Africa’, IMF Working Papers: 1–23.Google Scholar
Heston, A. and Summers, R. (2011), ‘B. Aten (2011), Penn World Table Version 7.0’. Center for International Comparisons of Production, Income and Prices, University of Pennsylvania.Google Scholar
Humphreys, M., Sachs, J., and Stiglitz, J. E. (2007), Escaping the Resource Curse, Cambridge: Cambridge University Press.Google Scholar
Hyde, S. and Marinov, N. (2011), ‘National Elections Across Democracy and Autocracy: Which Elections Can Be Lost? At http://hyde.research.yale.edu/nelda/#contact’. Available at SSRN 1540711.Google Scholar
Jong-A-Pin, R. (2009), ‘On the Measurement of Political Instability and its Impact on Economic Growth’, European Journal of Political Economy, 25 (1): 15–29.Google Scholar
Keltner, D., Gruenfeld, D. H., and Anderson, C. (2003), ‘Power, Approach, and Inhibition’, Psychological Review, 110 (2): 265–284.Google Scholar
Kipnis, D. (1972), ‘Does Power Corrupt?’, Journal of Personality and Social Psychology, 24 (1): 33–41.Google Scholar
Kipnis, D. (1976), The Powerholders, Chicago, IL: University of Chicago Press.Google Scholar
Kipnis, D., Castell, J., Gergen, M., and Mauch, D. (1976), ‘Metamorphic Effects of Power’, Journal of Applied Psychology, 61 (2): 127–135.Google Scholar
Klare, M. and Volman, D. (2006), ‘The African ‘Oil Rush’and US National Security’, Third World Quarterly, 27 (4): 609–628.Google Scholar
Laffer, A. B. (2004), The Laffer Curve: Past, Present, and Future: Executive Summary Backgrounder.Google Scholar
Levine, R., Loayza, N., and Beck, T. (2000), ‘Financial Intermediation and Growth: Causality and Causes’, Journal of Monetary Economics, 46 (1): 31–77.Google Scholar
Mankiw, N. G., Romer, D., and Weil, D. N. (1992), ‘A Contribution to the Empirics of Economic Growth’, The Quarterly Journal of Economics, 107 (2): 407–437.Google Scholar
Marshall, M. and Jaggers, K. (2004), Polity IV Project: Political Regime Characteristics and Transitions, 1800–2002, Data Set and Codebook, Available at http://www.systemicpeace.org/polity/polity4.htm.Google Scholar
Martinez, L. (2009), ‘A Theory of Political Cycles’, Journal of Economic Theory, 144 (3): 1166–1186.Google Scholar
McChesney, F. S. (1997), Money for Nothing: Politicians, Rent Extraction, and Political Extortion, Harvard University Press.Google Scholar
McGuire, M. C. and Olson, M. (1996), ‘The Economics of Autocracy and Majority Rule: The Invisible Hand and the use of Force’, Journal of Economic Literature, 34 (1): 72–96.Google Scholar
Mehrhoff, J. (2009), A Solution to the Problem of Too many Instruments in Dynamic Panel Data GMM, Discussion Paper Series 1: Economic Studies.CrossRefGoogle Scholar
Meredith, M. (2005), The Fate of Africa: From the Hopes of Freedom to the Heart of Despair: A History of Fifty Years of Independence, PublicAffairs.Google Scholar
Munck, G. L. and Verkuilen, J. (2002), ‘Conceptualizing and Measuring Democracy Evaluating Alternative Indices’, Comparative Political Studies, 35 (1): 5–34.Google Scholar
Nordhaus, W. D. (1975), ‘The Political Business Cycle’, The Review of Economic Studies, 42 (2): 169–190.Google Scholar
Olson, M. (1993), ‘Dictatorship, Democracy, and Development’, American Political Science Review, 87 (3): 567–576.Google Scholar
Perotti, R. (1996), ‘Growth, Income Distribution, and Democracy: What the Data Say’, Journal of Economic Growth, 1 (2): 149–187.Google Scholar
Petroleum, B. (2011), BP Statistical Review of World Energy.Google Scholar
Przeworski, A., Alvarez, M. E., Cheibub, J. A., and Limongi, F. (2000), Democracy and Development: Political Institutions and Well-Being in the World, 1950–1990 (Vol. 3), Cambridge: Cambridge University Press.Google Scholar
Putterman, L. (2007), ‘State Antiquity Index (‘Statehist’) Version 3’, Brown University. Available at http://www.econ.brown.edu/fac/louis_putterman/antiquity%20index.htm.Google Scholar
Ratner, M. (2011), ‘Middle East and North Africa Unrest: Implications for Oil and Natural Gas Markets’, Congressional Research Service (CRS) Report, available at: http://www.fas.org/sgp/crs/mideast/R41683.pdf.Google Scholar
Rivera-Batiz, F. L. (2002), ‘Democracy, Governance, and Economic Growth: Theory and Evidence’, Review of Development Economics, 6 (2): 225–247.Google Scholar
Robertson, I. (2012), The Winner Effect: How Power Affects Your Brain, Bloomsbury Publishing.Google Scholar
Rodriguez, F. and Rodrik, D. (2001), Trade Policy and Economic Growth: A Skeptic's Guide to the Cross-National Evidence, NBER Macroeconomics Annual 2000 (Vol. 15), Cambridge, MA: MIT Press, pp. 261–338.Google Scholar
Rodrik, D. (2002). Feasible Globalizations: National Bureau of Economic Research.Google Scholar
Rodrik, D., Subramanian, A., and Trebbi, F. (2004), ‘Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development’, Journal of Economic Growth, 9 (2): 131–165.Google Scholar
Rogoff, K. S. (1990), Equilibrium Political Budget Cycles: National Bureau of Economic Research Cambridge, Mass., USA.Google Scholar
Roodman, D. (2006), ‘How to do xtabond2: An Introduction to Difference and System GMM in Stata’, Center for Global Development Working Paper (103).CrossRefGoogle Scholar
Roodman, D. (2009), ‘A Note on the Theme of Too many Instruments*’, Oxford Bulletin of Economics and Statistics, 71 (1): 135–158.CrossRefGoogle Scholar
Ros, J. (2011), ‘Institutions and Growth: The Times-Series and Cross-Section Evidence’, Journal of Institutional Economics, 7 (4): 567–570.Google Scholar
Ross, M. L. (1999), ‘The Political Economy of the Resource Curse’, World Politics, 51: 297–322.Google Scholar
Sachs, J. D. (2003), Institutions don't Rule: Direct Effects of Geography on Per Capita Income: National Bureau of Economic Research.Google Scholar
Sala-i-Martin, X. (1994), ‘Cross-Sectional Regressions and the Empirics of Economic Growth’, European Economic Review, 38 (3): 739–747.CrossRefGoogle Scholar
Shi, M. and Svensson, J. (2006), ‘Political Budget Cycles: Do they Differ Across Countries and why?’, Journal of public Economics, 90 (8): 1367–1389.Google Scholar
Solow, R. M. (1956), ‘A Contribution to the Theory of Economic Growth’, The Quarterly Journal of Economics, 70 (1): 65–94.Google Scholar
Tavares, J. and Wacziarg, R. (2001), ‘How Democracy Affects Growth’, European Economic Review, 45 (8): 1341–1378.Google Scholar
Teorell, J., Charron, N., Samanni, M., Holmberg, S., and Rothstein, B. (2011), The Quality of Government Dataset, version 6Apr11, University of Gothenburg: The Quality of Government Institute. Available at http://www.qog.pol.gu.se.Google Scholar
Vanhanen, T. (2011), ‘A new Dataset for Measuring Democracy, 1810–2010’, Journal of Peace Research, 37 (2): 251–265.Google Scholar
Vieira, F., MacDonald, R. and Damasceno, A. (2012), ‘The Role of Institutions in Cross-Section Income and Panel data Growth Models: A Deeper Investigation on the Weakness and Proliferation of Instruments’, Journal of Comparative Economics, 40 (1): 127–140.Google Scholar
Weingast, B. R. and Wittman, D. (2008), The Oxford Handbook of Political Economy, Oxford Handbooks Online.Google Scholar
Windmeijer, F. (2005), ‘A Finite Sample Correction for the Variance of Linear Efficient Two-Step GMM Estimators’, Journal of Econometrics, 126 (1): 25–51.Google Scholar
Wintrobe, R. (1990), ‘The Tinpot and the Totalitarian: An Economic Theory of Dictatorship’, The American Political Science Review, 84: 849–872.Google Scholar
Wintrobe, R. (1998), The Political Economy of Dictatorship (Vol. 6), Cambridge: Cambridge University Press.Google Scholar
World Bank, G. (2012), World Development Indicators 2012, World Bank Publications.Google Scholar
Wright, J. (2008), ‘Do Authoritarian Institutions Constrain? How Legislatures Affect Economic Growth and Investment’, American Journal of Political Science, 52 (2): 322–343.CrossRefGoogle Scholar