Political regimes have no impact on the growth of total income when countries are observed
across the entire spectrum of conditions. Contrary to widespread concerns, democracies do
not reduce the rate of investment even in poor countries. It appears that when countries are
poor there is little governments can do, so that it makes little difference for economic
growth whether rulers are elected or hold power by force. In wealthier countries, patterns of
growth are no longer the same. Dictatorships rely on the growth of labor force and on
keeping wages low, while democracies pay higher wages, use labor more effectively, and
benefit more from technical progress. But while growth under wealthier dictatorships is
more labor-extensive and labor-exploitative than under wealthier democracies, so that
functional distributions of income are different, the average rates of growth of total income
are about the same.
Thus, we did not find a shred of evidence that democracy need be sacrificed on the altar of
development. The few countries that developed spectacularly during the past fifty years
were as likely to achieve this feat under democracy as under dictatorship. On the average,
total incomes grew at almost identical rates under the two regimes. Moreover, per capita
incomes grow faster in democracies. The reason is that democracies have lower rates of
population growth. In spite of rapid diffusion of medical advances, death rates remain
somewhat higher under dictatorship and life expectancies are much shorter. Population
grows faster under dictatorships because they have higher birth rates, and the difference in
birth rates is due to higher fertility, not to age structures of the population.
Women are particularly affected by dictatorships. They participate in gainful activities at
the same rates as they do in democracies and as workers they get lower wages. But they also
have more children, see more of them die, and are themselves more likely to die in
childbirth.
These findings add up to a bleak picture of dictatorships. While democracies are far from
perfect, lives under dictatorships are grim and short. Dictatorships are regimes in which
political rulers accede to and maintain themselves in power by force. They use force to
prevent people from expressing their opposition and to repress workers. Because they rule
by force, they are highly vulnerable to any visible signs of dissent. They are successful
economically only if they are “stable,” if no one expects that dictators would change or the
dictatorship would be abolished. Since in dictatorships policies depend on the will, and
sometimes the whim, of a dictator, they exhibit high variance of economic performance:
some generate miracles, some disasters, and many generate both. Because their policies and
their performance are so unpredictable, they do not allow people to plan their lives,
inducing households to hoard the least risky asset, namely children. In the end, per capita
incomes grow slower and people live shorter lives in dictatorships. Thus, while scarcity
makes lives destitute, regimes do make a difference, not only for political liberty but also
for material well-being.