Dictatorship, Democracy, and the Provision of Public Goods

A model of governance implies that democracies provide public goods at different levels than dictatorships. Systems of governance are characterized by inclusiveness—the degree to which public good decisions reflect the interests of all citizens versus an elite subset. The theory indicates that less inclusive (autocratic) governments will under-provide public consumption goods relative to more inclusive (democratic) governments. Governance indicators are formed from data on attributes of governments, e.g., the method of selecting the chief executive, the power of the legislature, and the openness of political competition. Autocratic governments are found to provide public schooling, roads, safe water, public sanitation, and pollution control at levels far below democracies. Public goods provision is strongly related to per capita income in democracies, but not in autocracies. JEL classifications: H4, D7, Q2 * Professor of Economics, University of California, Santa Barbara, and University Fellow, Resources for the Future. This material is based upon work supported by National Science Foundation Grant SBR-9808696. Ed Basldon and Patricia Silva provided valuable research assistance.