Do Authoritarian Institutions Constrain? How Legislatures Affect Economic Growth and Investment

Abstract

This article explores why authoritarian regimes create legislatures and then assesses their effect on economic growth and investment. In authoritarian regimes more dependent on domestic investment than natural resource revenue, the dictator creates a binding legislature as a credible constraint on the regime's confiscatory behavior. In regimes dependent on natural resource revenue, the nonbinding legislature serves as a mechanism for the dictator to bribe and split the opposition when he faces credible challenges to the regime. Using data from 121 authoritarian regimes from 1950 to 2002, the results indicate that binding legislatures have a positive impact on economic growth and domestic investment, while nonbinding legislatures have a negative impact on economic growth.