Do Autocratic Political Leaders Always Hamper Economic Growth? Evidence from Australia
34 Pages Posted: 15 Apr 2020 Last revised: 28 Apr 2020
Date Written: March 25, 2020
We discuss the contribution of autocratic tendencies in democratically elected political leaders to the economic growth of developed economies. To this end, we exploit the unique election of Sir Charles Court as state premier of Western Australia in 1975 to estimate the contribution of autocratic state premiers to economic growth within a federal system of checks and balances based on a mixed Presidential and Westminster parliamentary institutional design. We hypothesize that some autocratic tendencies may help economic growth provided that discretion is used to address government failures which act as a brake on the economic development and could lead to institutional sclerosis, but which do not translate into corrupt practices and abuse of power for personal gain. Using the Synthetic Control Method, we match Western Australia with two large control samples of countries and regions to construct a counterfactual scenario in response to the administration of Court. Our estimates indicate a large positive per capita income gap that tends to increase over time and which provides evidence in support of the presence of structural break. Down to the present day, per capita income of Western Australia is 27 percent higher compared to its synthetic control group as a result of Court’s premiership. The estimated growth impact of Court’s administration is robust to a variety of placebo checks, it appears to be statistically significant at conventional levels, and does not seem to be confounded by the heterogeneity of the control samples.
Keywords: political institutions, economic growth, Western Australia, Sir Charles Court
JEL Classification: C33, D72, N17, O43, P51
Suggested Citation: Suggested Citation