Private Investment and the Institutionalization of Collective Action in Autocracies: Ruling Parties and Legislatures

Abstract

Despite the absence of formal institutions to constrain opportunistic behavior, some autocracies successfully attract private investment. Prior work explains such success by the relative size of the autocrat's winning coalition or the existence of legislatures. We advance on this understanding by focusing on the key constraint limiting coalition size and legislative efficacy: organizational arrangements that allow group members to act collectively against the ruler. We introduce three new quantitative measures of the ability of ruling party members to act collectively: ruling-party institutionalization, the regularity of leader entry, and the competitiveness of legislative elections. These characteristics are robustly associated with higher investment. Our evidence also points to an effect on the risk of expropriation in non-democracies.

Keywords: Investment, Dictatorship, Collective Action, Ruling Parties, Legislatures

JEL Classification: O17, P16, P51