Autocratic Rule, Economic Performance: Reframing the Loyalty-Competence Trade-Off

• In Event: Emerging Scholars in Political Economy

Abstract

Studies of authoritarian governance explain their economic underperformance as resulting from the loyalty-competence trade-off: rulers sacrifice the competence of their subordinates, hiring incompetent but loyal agents not to be challenged by them. However, the theory cannot explain why autocracies differ substantially in terms of their longevity and policy performance. 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 all actors face uncertainty regarding the policy preference of any successor ruler. With these enrichments, the model generates clear predictions about how two key elements - the subordinates' effectiveness against any threat and their likelihood of future employment if the current regime collapses - affect the loyalty-competence trade-off.

Author

• Francis William TOUOLA MEDA, New York University