Carl Henrik Knutsen

Democracy, Dictatorship and Protection of Property Rights

Abstract This article investigates how political regimes influence property rights. The article reviews arguments for and against the hypothesis that democracy enhances property rights protection, and then conducts empirical tests. Democracy is likely endogenous to property rights protection. The analysis takes this into account by utilising an innovative instrument for democracy. The results, based on data from 1984 to 2004 for over 120 countries, show that democracy enhances property rights protection, even when controlling for endogeneity and country-specific characteristics.

Measuring Effective Democracy

This article discusses methodological problems related to operationalizing substantive definitions of democracy. The article argues that index-constructors need to be particularly conscious of measurement level issues. If not, their indexes may face severe reliability and validity problems, which in turn may bias empirical analyses utilizing the indexes. The article focuses particularly on the “effective democracy” measure developed by Ronald Inglehart and Christian Welzel. The measure has been used by Inglehart and Welzel in several studies, particularly for empirically testing hypotheses deduced from their version of modernization theory. These tests have generated very strong results in favor of the theory. The article is sympathetic to Inglehart and Welzel’s goal of capturing “substantive” rather than “formal” democracy, but is critical of the specific measure proposed.The measure has several unfortunate theoretical and distributional properties; the empirical scores generated by the measure are often highly misleading. Empirical analysis suggests the index is biased, and that rich, Western countries are particularly favored. Utilization of the measure in statistical analysis may therefore lead to false inferences.

Property rights in dictatorships: kings protect property better than generals or party bosses

This paper investigates whether types of dictatorships differ systematically when it comes to the protection of property rights. Differentiating between monarchies, military regimes, one-party and multiparty autocracies, the paper argues that different dictatorial institutions create different incentives to protect property and enforce contracts by influencing the time horizon of the ruling elite. Where rulers fear losing power and regime insiders are uncertain about their own political survival beyond the dictator, expropriation of property is more likely to take place. The paper reports evidence that monarchic autocracies protect property rights relatively well compared to other types of dictatorships, and even when compared to democracies was found. In these regimes, dynastic succession and certainty about the composition of the future elite provide rulers with relatively long time horizons for their dynasties, reducing incentives to expropriate property for short-term gain.

Democracy and economic growth: A survey of arguments and results

This paper surveys the literature on how democracy affects economic growth. The paper first presents descriptive statistics and brief case-descriptions to illustrate how democracy and dictatorship may affect growth. Thereafter, it evaluates five central arguments on democracy and growth, before surveying empirical studies on the relationship. Furthermore, the paper highlights critical methodological challenges, and draws implications for constructing valid models for empirical research on the topic. The review shows that there is still disagreement over whether democracy enhances growth or not. Nevertheless, in the light of more recent studies, using better methodological approaches and more data than previous studies, two trends are recognizable: first, the hypothesis that democracy reduces economic growth is refuted by recent studies; second, the hypothesis that democracy has no effect on growth, although still widespread in the academic community, seems less plausible today than it did 10 or 20 years ago. Several recent studies show that democracy has positive effects on growth, although these effects are ‘indirect’ in the sense that democracy affects growth through, for example, enhancing human capital or strengthening the protection of property rights.

Autocratic Elections: Stabilizing Tool or Force for Change?

Do elections reduce or increase the risk of autocratic regime breakdown? This article addresses this contested question by distinguishing between election events and the institution of elections. The authors propose that elections stabilize autocracies in the long term but at the price of short-term instability. Elections are conducive to regime survival in the long run because they improve capacities for co-optation and repression but produce short-term instability because they serve as focal points for regime opposition. Drawing on data from 259 autocracies from 1946 to 2008, the authors show that elections increase the short-term probability of regime failure. The estimated effect is retained when accounting for the endogeneity of autocratic elections; this finding is critical, since some autocrats may or may not hold elections because of perceived effects on regime survival. The authors also find that this destabilizing effect does not operate in the long term. They find some, although not as strong, evidence that elections stabilize autocratic regimes in the medium to long term, despite their destabilizing immediate effects. These temporal effect patterns are present for both executive and legislative elections, and they are robust to using different measures, control variable strategies, and estimation techniques. In line with expectations, both effect patterns are much clearer for multiparty autocratic elections than for completely uncontested elections.

V-Dem Codebook V6

All variables that V-Dem is compiling are included in the Codebook.

Investigating the Lee thesis: how bad is democracy for Asian economies?

This paper discusses the hypothesis that democracy hurts economic growth and development, also known as the Lee thesis, and discusses why one could expect dictatorship to be particularly beneficial for growth in the Asian context. Three general theoretical arguments in support of the Lee thesis are then presented. However, the empirical results, based on panel data analysis on more than 20 Asian countries, do not support the hypothesis that dictatorship increases economic growth in Asia. There is no significant, average effect of democracy on growth. Asian dictatorships do invest a larger fraction of their GDP than democracies, but they are worse at generating high enrollment ratios in education after primary school.

The Autocratic Welfare State Resource Distribution, Credible Commitments and Political Survival

We investigate the adoption and characteristics of social welfare policies in autocracies. If one considers social policies merely as a tool for progressive redistribution to those in need, one might not expect autocratic regimes to spend resources on them. Empirically, however, several autocracies do have extensive welfare programs covering different types of risks. We argue that autocrats often implement such programs for political survival reasons. Targeted welfare programs allow autocrats to make credible commitments on the distribution of resources to their ruling coalition also in the future, thus reducing the probability of revolts or coups. Our argument generates a number of quite different empirical implications, which we test using our novel Social Policies Around the World dataset: In line with our expectations, we, for instance, find that autocracies are as likely as democracies to have old-age pension systems, but autocracies tend to have less universal systems targeted towards a narrower group of recipients. We also find that single-party regimes are more strongly associated with the existence of pension programs than military regimes and monarchies. Although the evidence is far from clear, we find some indications that social policy programs are adopted in contexts when autocratic regimes face graver threats to their survival, and that having pension systems may reduce the probability of autocratic regime breakdown, and of democratization more in particular.

Security Threats, Enemy-Contingent Policies, and Economic Development in Dictatorships

In this article, I introduce, discuss, and formalize the argument that the type of security threat a dictatorial regime faces has implications for economic policy making and, consequently, economic outcomes. Dictators who mainly face internal threats often have incentives to conduct policies that are harmful to economic development, like underproviding productive public investment. However, dictators who mainly face external threats are more likely to conduct economic development–enhancing policies. The type of security threat facing a dictator thus contributes to explaining the large variation in economic development among dictatorships. The argument finds empirical support in cases from different geographical regions and historical periods. One particularly illustrative example, addressed in the article, is Japan in the nineteenth century, where the sharply increased severity of external threats from Western countries induced the selection of development-enhancing policies in the last half of the century.

Government Turnover and the Effects of Regime Type How Requiring Alternation in Power Biases Against the Estimated Economic Benefits of Democracy

Incumbents voluntarily leaving office after losing elections is a hallmark of democracy. Hence, the most prominent binary democracy measure (Democracy–Dictatorship/Alvarez–Cheibub–Limongi–Przeworski [DD/ACLP]) requires observed alternation in power to score regimes democratic. Such “alternation rules” may, however, lead to underestimating democracy’s effect on economic growth. As strong economic performance reduces the probability of incumbents losing democratic elections, young democracies with high growth may falsely be coded dictatorships; their popular governments have yet to lose an election. We identify the expected bias using different tests, for example, when following Przeworski et al.’s advice to re-estimate relationships after re-coding multi-party regimes without alternation as democratic, or when employing differences in information about alternation from different time points to contrast original DD estimates with our “real-time” DD estimates. We present resembling arguments on how alternation rules may bias democracy’s estimated relationships with civil war onsets and coups, but find fewer empirical indications of biases here.