Economic Crisis, Natural Resources, and Irregular Leader Removal in Autocracies

Abstract

Why do autocratic leaders escape revolution, coups, and assassination during times of economic crisis? I argue that the spike in natural resource revenues since the 1960s has increased autocratic crisis resilience. The availability of this alternative revenue stream provides autocratic leaders with a constant inflow of money, increases their ability to repress dissent, and improves their access to international credit. Extending the analysis back to 1875, I show that the relationship between economic crisis and irregular leader removal in autocracies is strong and robust before the 1960s, but disappears in more recent periods. Interaction analyses confirm that the effects of economic crisis are moderated by natural resource income. These findings are robust to an array of alternative specifications, including analyses that address endogeneity concerns via instrumental variable (IV) estimation. A more particular examination of the theoretical mechanisms also supports the argument. These findings challenge widely held beliefs in the literature of a strong, direct effect of economic crisis on autocratic leader survival; they explain why economic crisis seems to destabilize some autocrats, but not others.

Commodity terms of trade shocks and political transitions

“…The use of presample NX shares in Section 4.4 does not necessarily address the concern that the NX/GDP ratios may be correlated with the error term. For example, if autocratic oil exporters had high NX shares during the presample years and are intrinsically less likely to democratize in response to negative CTOT shocks than other autocracies due to accumulated oil wealth (Gause III, 2011; Krishnarajan, 2019a), the NX shares could still be correlated with the error term. To address this issue, following Borusyak et al (2018), we control for countries’ aggregate net export exposure () times year effects.…”

“…Caselli and Tesei (2016) find that higher export prices make intermediate autocracies more autocratic. Krishnarajan (2019a) argues that the growth in natural resource revenues since the 1960s has helped autocratic leaders survive economic crises (Gause III, 2011).…”

Resource curse - Wikipedia

“…[72] Other forms of resource wealth have also been found to strengthen autocratic rule. [73] A 2016 study finds that resource windfalls have no political impact on democracies and deeply entrenched authoritarian regimes, but significantly exacerbate the autocratic nature of moderately authoritarian regimes. [74] A third 2016 study finds that while it is accurate that resource richness has an adverse impact on the prospects of democracy, this relationship has only held since the 1970s.…”

The Myth of the Benevolent Autocrat? Internal Constraints, External Constraints, and Economic Development in Autocracies

“…In the "Electoral controls" model, I account for the relationship between elections and coups (Wig and Rød 2016) and add controls for all national elections, with data from the Nelda dataset (Hyde and Marinov 2012) as well as a counting variable denoting years since last election. The "Economic controls" model accounts for the economic impacts on coups and leader-instability (Kim 2016;Krishnarajan 2019) by adding short-term economic fluctuations such as annual GDP/capita growth from the Penn World Table V9.0 (Feenstra et al 2015) and oil income from Ross Oil and Gas Data (Ross and Mahdavi 2015).…”