Institutional quality and the tenure of autocrats
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A substantial body of literature concludes that nations that maintain market institutions and have limited governments have higher economic growth rates and higher per capita incomes. This conclusion goes back at least to Adam Smith (1937 ), and includes historical studies by Mokyr (1990) and Landes (1998), and institutional analyses by Olson (1996) and Baumol (1990). If the advantages of market institutions are widely recognized, why would the political leadership of any nation not adopt them? One answer often applied to autocracies is that while the general population may be better off with market institutions, the political leadership can obtain personal benefits from more oppressive economic institutions.
Referring to the poor nations of Africa, Ayittey (2008: 168) says, “African despots are loath to relinquish control or power. They would rather destroy their economies and countries than give up economic and political power. This power allows them to allocate...
KeywordsPublic Choice Capita Income Economic Freedom Economic Institution Institutional Quality
This paper was presented at the annual meetings of the Public Choice Society in New Orleans, and the European Public Choice Society in Zurich, in 2013. The authors gratefully acknowledge helpful comments from several scholars at those conferences, and comments from two anonymous referees.
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