Economic Growth, Political Institutions, and Leadership Transitions

Abstract

Leaders matter for growth, but does growth matter for leaders? We introduce a set of strong instruments for growth, based on hill-shaped relationships of agricultural output with temperature and precipitation, to test the causal effect of growth on national leadership turnover, after controlling for educational, demographic, and a range of institutional and policy factors. We find that: (i) growth significantly reduces the probability of leadership transitions, (ii) transitions to democracy robustly accompany leadership transitions after controlling for growth, policies, and institutions, and (iii) during times of major institutional change, growth has a less precise but substantially positive effect on leadership transitions.

Keywords: Political transitions, leaders, economic growth, political economy

JEL Classification: C53, H89