Victor Menaldo

Do Natural Resources Fuel Authoritarianism? A Reappraisal of the Resource Curse

A large body of scholarship finds a negative relationship between natural resources and democracy. Extant cross-country regressions, however, assume random effects and are run on panel datasets with relatively short time dimensions. Because natural resource reliance is not an exogenous variable, this is not an effective strategy for uncovering causal relationships. Numerous sources of bias may be driving the results, the most serious of which is omitted variable bias induced by unobserved country-specific and time-invariant heterogeneity. To address these problems, we develop unique historical datasets, employ time-series centric techniques, and operationalize explicitly specified counterfactuals. We test to see if there is a long-run relationship between resource reliance and regime type within countries over time, both on a country-by-country basis and across several different panels. We find that increases in resource reliance are not associated with authoritarianism. In fact, in many specifications we generate results that suggest a resource blessing.

Coercive Capacity and the Prospects for Democratization

How does the strength of a state’s coercive apparatus under autocracy affect the likelihood of democratic transition? While a broad range of literature posits a negative link between repression and democracy, empirical models of the determinants of democratization rarely include measures that capture this relationship. We generate a panel dataset with global scope from 1950-2002 to explicitly empirically assess whether coercive capacity is negatively associated with democracy. We find that increased coercive capacity under autocracy has a strong negative impact on both a country’s level of democracy as well as the likelihood of democratization if the country is autocratic, and that these results are robust to model specification, potential endogeneity, and alternative explanations. The analysis suggests that empirical studies of democratization should include measures of repression to explicitly account for the widely assumed link between coercive capacity and autocracy.

Gaming Democracy: Elite Dominance during Transition and the Prospects for Redistribution

Inequality and democracy are far more compatible empirically than predicted by social conflict theory. This paper speaks to this puzzle, identifying the scope conditions under which democratization induces greater redistribution. Because autocrats sometimes have incentives to expropriate economic elites, who lack reliable institutions to protect their rights, elites may prefer democracy to autocratic rule if they can impose roadblocks to redistribution under democracy ex ante. Using global cross-sectional time-series data (1972-2008), we find that only if elites are politically weak during transition, as when there is revolutionary pressure, is there a relationship between democracy and redistribution. Redistribution is also greater if a democratic regime can avoid adopting and operating under a constitution written by outgoing elites and instead create a new constitution that redefines the political game. This finding holds across three different measures of redistribution and instrumental variables estimation. We also document the ways in which elites “bias” democratic institutions.

If You’re Against Them You’re With Us The Effect of Expropriation on Autocratic Survival

This article advances a theory of why some dictators weaken the elite through expropriation whereas others do not. When the organization that launches a new dictator into power is uncertain about whether he will remain loyal to them, a dictator’s decision to expropriate the preexisting elite may contribute to political stability by signaling his exclusive reliance on this group. The authors corroborate this claim empirically. Using new data compiled on land, resource, and bank expropriations in Latin America from 1950 to 2002, the authors show that large-scale expropriation helps dictators survive in power. Furthermore, expropriation tends to occur early in a dictator’s tenure, and its effect on leader survival decays over time, providing additional evidence for its signaling value. The history of autocracy in Mexico between 1911 and 2000 further illustrates the importance of expropriation in promoting autocratic survival as well as how the codification of new property rights can transform a dictator’s launching organization into a new economic elite.

Dictators as Founding Fathers? The Role of Constitutions Under Autocracy

This article advances a theory of why autocratic coalitions adopt constitutions. We argue that autocratic rulers adopt constitutions in the nascent stages of an autocratic coalition taking power, when uncertainty about leader intentions is high. Constitutions can serve to consolidate a new distribution of power, allowing a launching organization (LO) to codify and defend their rights. Autocratic coalitions that adopt constitutions should therefore last longer in power than those that do not. Using new data compiled on constitutions created under autocracy in Latin America from 1950 to 2002, we show that autocratic coalitions who adopt and operate under constitutions extend their survival. This result holds after controlling for the presence of other autocratic institutions, country fixed effects, and after using an instrumental variables strategy to address reverse causation. A case study of Mexico details the mechanism by which this relationship between constitutions and stability occurs.

Rainfall, Human Capital, and Democracy

Why are some societies characterized by enduring democracy while other societies are persistently autocratic? We show that there is a systematic, non-linear relationship between rainfall levels and regime types in the post-World War II world: stable democracies overwhelmingly cluster in a band of moderate rainfall (550 to 1300 mm of precipitation per year); persistent autocracies overwhelmingly cluster in deserts and semi-arid environments (0 to 550 mm per year) and in the tropics (above 1300 mm per year). We also show that rainfall does not work on regime types directly, but does so through the its impact on the level and distribution of human capital. Specifically, crops that are both easily storable and exhibit modest economies of scale in production grow well under moderate amounts of rainfall. The modal production unit is a family farm that can accumulate surpluses. In such an economy there are incentives to make intergenerational investments in human capital. A high level and broad distribution of human capital makes democratic consolidation more likely.

The Fiscal Roots of Financial Underdevelopment

Why do some countries indulge in financial repression, harming economic development in the process, whilst others promote financial development? Three main explanations have been put forth. Market failures, due to information asymmetries, mean that credit is rationed even when lenders could potentially benefit from making loans readily available. Political failures, due to state capture, mean that credit will be rationed as a way of generating rents for politically powerful financial incumbents. The state might have its own fiscal reasons for politicizing the supply and price of credit, since financial repression provides easy-to-collect revenues. I draw on the third approach to argue that the state’s fiscal imperative is usually the primary reason behind financial repression, and even when private actors benefit they are subordinate to this concern. A dynamic panel analysis that exploits instrumental variables and a case study of Mexico adduce strong empirical support for my fiscal transaction cost theory.

Democracy, Elite-Bias and Financial Development in Latin America

Does democracy induce financial development? There are good theoretical reasons to believe this to be the case, but the evidence adduced to support this claim has been mixed. In this article, the authors posit that only democracies that appeal to the median voter should experience financial development because those democracies have adopted their own constitution after transition, rather than having inherited one from an authoritarian predecessor. The authors empirically test this theory by focusing attention on Latin America, where there have been several reversals and improvements in financial outcomes and where many countries have cycled between regime types. They find robust support for it across different specifications. While popular democracies tend to reform their financial systems, have greater participation in the banking system, increase the supply of credit and reduce its price, and grow their stock markets, elite-biased democracies do not.

The Political Economy of Autocratic Constitutions

Why do autocrats adopt constitutions? Constitutions can help dictators consolidate power, increase investment, and boost economic development — all while generating a steady flow of rents for themselves and their cronies without empowering challengers so as to undermine their authority. Autocratic constitutions play a crucial role in consolidating the inner ranks of the autocratic regime by fostering loyalty and trust between the dictator and his launching organization (LO) early in the regime, when uncertainty about the dictator’s intentions is considerable and the LO’s de facto power is at its height. One key function of autocratic constitutions is to consolidate a new distribution of power. To accomplish this, autocratic constitutions may outline limits on executive authority, codify individual rights and political obligations and, given the right conditions, impose constraints on executive authority. We test this theoretical framework on a panel dataset of Latin American dictators between 1950 and 2002. We find that the creation of a constitution under dictatorship can enable an autocratic coalition to co-opt threats to their rule and last longer in office, a finding that holds even after controlling for country fixed effects, other possible indirect institutional pathways and after instrumenting autocratic constitutions with constituent assembly elections held prior to constitutional promulgation. Employing the same robustness checks, we also find that autocratic constitutions are associated with stronger property rights protection, higher rates of private investment, and economic growth.

Authoritarianism and the Elite Origins of Democracy

This book argues that in terms of institutional design, the allocation of power and privilege, and the lived experiences of citizens, democracy often does not restart the political game after displacing authoritarianism. Democratic institutions are frequently designed by the outgoing authoritarian regime to shield incumbent elites from the rule of law and give them an unfair advantage over politics and the economy after democratization. Authoritarianism and the Elite Origins of Democracy systematically documents and analyzes the constitutional tools that outgoing authoritarian elites use to accomplish these ends, such as electoral system design, legislative appointments, federalism, legal immunities, constitutional tribunal design, and supermajority thresholds for change. The study provides wide-ranging evidence for these claims using data that span the globe and date from 1800 to the present. Albertus and Menaldo also conduct detailed case studies of Chile and Sweden. In doing so, they explain why some democracies successfully overhaul their elite-biased constitutions for more egalitarian social contracts.