Why authoritarians flop as economic modernizers


Poor countries like India should resist the authoritarian temptation and stick to pushing smart reforms through the democratic process, argues Noah Smith, an assistant professor of finance at Stony Brook University.

During Augusto Pinochet’s 16 1/2-year term as Chile’s president, for example, real per capita income grew at a rate of a little more than 2 percent a year. But in the 16-year period after Pinochet’s exit and the restoration of democracy, growth doubled to about 4 percent a year.

“That’s hardly a stellar result for enlightened despotism.. .. [and] the evidence of history confirms the disappointing performance of dictators” he adds, citing a recent paper by economists Daron Acemoglu, Suresh Naidu, James Robinson and Pascual Restrepo which estimates that switching from authoritarian government to democracy tends to increase a country’s economic growth rate by around 20 percent.

The biggest exception to this rule, of course, is Chinese leader Deng Xiaoping, Smith notes:

But even in the case of Deng, it’s crucial to note that his rule followed that of an even more powerful despot, Mao Zedong, whose catastrophic policies shattered the Chinese economy and starved tens of millions of people to death. That illustrates one of the key truths about tyranny — there’s no way to ensure that you get the enlightened kind. Because authoritarian rulers have little check on their power, the country is subject to their whims. Sometimes those whims produce spectacular results, but as Acemoglu et al.’s research shows, on average they do more harm than good. 


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