Economic retrospective voting in dictatorships

Dictators have an interest in strong economic performance. In an Olson model, the dictator wants to maximize his total tax take, which generally means getting the underlying economic structure right but taxing at a rate that's too high from the perspective of maximizing GDP but just right from the perspective of maximizing the dictator's share of GDP.

But what happens when the dictator's tenure is at issue? Results then are less clear. If improvements in economic performance reduce unrest, then the dictator might tax less than would be otherwise optimal in order to lower his policing costs; if a strong economy builds alternative power bases that might provide threats to the dictator's position, then things are less clear.

ANU's Paul Burke looks at political survival in democracies and autocracies, finding that both autocrats and democrats are more likely to lose power when they preside over poor economic performance. In fact, they seem about equally responsive to economic conditions:

The LPM estimates in Table 10 provide no evidence that the short-run impact of economic growth on political survival differs between democracies and autocracies. Interestingly, the IV estimates suggest that the impact of the growth rate on next-year leader exit odds is smaller in democracies than autocracies, although the difference is only significant in the estimate in column 2 (and only at the 10% level). The IV estimates in columns 3 and 5-6 indicate that the short-run impact of growth on leader exits remains negative in democracies, albeit smaller (in absolute value terms) than that for autocracies.

Policy upshot?

Crisis assistance conditioned on the benevolence of national leaders may be valuable in shoring up the positions of benevolent leaders during times of economic hardship, while ensuring that corrupt or autocratic leaders do not receive relief from domestic political pressures at the very moment when these pressures are building in strength.