There's No Gratitude (In Dictatorships): Economic Performance and Finance Minister Removal across Regime Type

Abstract

Are ministers of finance more likely to keep their job if the economy is doing well? We argue that the answer depends on the regime type. Democratic leaders have incentives to retain high performing ministers of finance since they can help them win elections. The incentive structure is less clear-cut for autocrats. While growth stabilizes the regime, a high performing minister of finance can also be a potential rival. Moreover, they will to a higher degree than their democratic counterparts be judged on their abilities to enrich the leader rather than creating growth. Using novel data on over 2,800 ministers of finance we demonstrate a close link between economic growth and the retainment of finance ministers in democracies but not in autocracies. The findings indicate that democracies are better at fostering and rewarding competence at the highest level of political office, speaking to the merits of democracy relative to autocracy.

Keywords: Autocracy, Democracy, Economic Performance, Economic Growth, Regime Types, Cabinets, Minister of Finance, Economic Crisis