Autocratic Rule and Economic Performance: The Loyalty-Competence Trade-Off

• In Event: Elite Politics in Africa (Panel II)

Abstract

Studies of authoritarian governance attribute their longevity and economic underperformance to the loyalty-competence trade-off: rulers sacrifice the competence of their subordinates, hiring incompetent but loyal agents. However, the theory fails to explain how many autocrats maintain longevity while simultaneously achieving economic prosperity. I endogenize loyalty and competence in a two-level principal-agent model between a ruler, a pool of subordinates, and a representative citizen with two core innovations. Policy outcomes can affect regime stability, and there is no institutionalized succession process. The model generates clear predictions about how two key elements - the threat of social protests and uncertainty regarding the policy preference of any successor ruler - shape the loyalty-competence trade-off. I then explore two extensions of the model, revealing counterintuitive findings. First, the shadow of democratization increases the set of kleptocratic regimes characterized by long tenures and poor economic performance. Second, a smooth succession, which is the process by which autocrats can transfer power to their offspring, reduces the set of kleptocratic regimes.

Author

• Francis William TOUOLA MEDA, New York University