Dictatorship vs. Democracy In Poor Countries

You know what’s irritating about dictators and autocrats? They’re not all bad. Sure, some have successfully turned their nations into a collection of paranoid, starving and stunted dwarves. But there are outliers, such as Lee Kuan Yew in Singapore. In a new paper,  economists Ling Shen and Marc Schiffbauer compare the evolution of economic growth under dictatorships and democracies. From the abstract:

A democratic society is often regarded as a prerequisite for economic growth and development. Yet, most empirical studies are not capable of identifying a positive link between GDP growth and democracy indexes. In addition, it is a stylized empirical fact that: (i) most developing countries are dictatorships; and (ii) many poor dictatorships have experienced high growth performances and emerged from poverty such as South Korea, China and Egypt. Against this background, it is of interest to analyse in which ways the growth performance between autocratic and democratic economies may differ, in particular among low-income countries…

We demonstrate that poor but large and stable dictatorships exhibit a higher equilibrium growth rate than comparable (equally poor) democracies. Moreover, there exists a particular threshold value in income such that the growth-reducing impact of dictatorial consumption (corruption) outweighs the higher (initial) public investments. Above this, the growth rate under democracy dominates the one in dictatorship.