Autocracy, Devolution and Growth

Some autocracies are economically successful; others stagnate at low levels of production. Paradoxically, the latter ones appear to possess more natural resources and be more resistant to political change. This paper adresses a dynamic relation between the capital accumulation and the political regime in presence of resource rents. It argues that private capital accumulation increases an unfettered autocrat’s temptation to expropriate. As a result, private investment in an autocracy would only take place if the ruler is willing to eventually relinquish some power, which, in turn, is affected by the his benefits of control (such as natural resource rents). The model finds a non-monotone relation between the autocrat’s resource rents, growth and evolution of political regime: if the rents are low, the country develops under maintained autocracy and becomes less autocratic only after a period of growth. If rents are medium-sized, the country becomes less autocratic early and grows in a non-autocratic regime. Finally, if rents are high, the country stagnates under the autocratic rule, thereby suffering from a resource curse. JEL classification: D02, D72, D9, O1