Investment without Democracy : Ruling-Party Institutionalization and Credible Commitment in Autocracies

What explains private investment in autocracies, where institutions that discourage expropriation in democracies are absent? We argue that institutionalized ruling parties allow autocrats to make credible commitments to investors. Such parties promote investment by solving collective-action problems among a designated group, who invest with the expectation that the autocrat will not attempt their expropriation. We derive conditions under which autocrats want to create such parties, and we predict that private investment and governance will be stronger in their presence. We illustrate the model by examining the institutionalization of the Chinese Communist Party.

Bibliographic Details

Main Authors:	Gehlbach, Scott, Keefer, Philip
Format:	Journal Article biblioteca
Language:	EN
Published:	2011
Subjects:	Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior D720, Capital, Investment, Capacity E220, Economic Development: Financial Markets, Saving and Capital Investment, Corporate Finance and Governance O160, Formal and Informal Sectors, Shadow Economy, Institutional Arrangements O170, Socialist Systems and Transitional Economies : Political Economy, Property Rights P260, Socialist Institutions and Their Transitions: Financial Economics P340,
Online Access:	http://hdl.handle.net/10986/5768
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