DP8962 | The Dictator Effect: How Long Years in Office Affects Economic Development in Africa and the Near East

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This paper contributes to the growing literature on the links between political regimes and economic development by studying the effects of years in office on economic development. The hypothesis is that dictators who stay in office for a long time period will become increasingly corrupt, and that their poor governance will impact on economic growth (which is reduced), inflation (which increases) and the quality of institutions (which deteriorates). This may be related to the fact that their time horizon is shrinking: they develop (in the terminology developed by Olson) from ?stationary bandits? into ?roving bandits?. Or they may get caught into a ?disinformation trap?, caused by the ?dictator dilemma?. We test these hypotheses and indeed find strong evidence for the existence of a dictator effect: the length of the rule is negatively related to economic growth and the quality of democratic institutions, and positively related to inflation. This effect is particularly strong in young states and in ?single-party? regimes. The negative effect of years in office was almost constant in time and did not disappear after about 1992.