Autocracies and Development in a Global Economy: A Tale of Two Elites

Data on the growth performances of countries with similar comparative (dis)advantage and
political institutions reveal a striking variation across world regions. While some former autocracies such as the East Asian growth miracles have done remarkably well, others such as the
Latin American economies have grown at much lower rates. In this paper, we propose a political economy explanation of these diverging paths of development by addressing the preferences
of the countryís political elite. We build a theoretical framework where factors of production
owned by the political elites di§er across countries. In each country, the incumbent autocrat will
cater to the preferences of the elites when setting trade policy and the property rights regime.
We show how stronger property rights may lead to capital accumulation and labor reallocation
to the manufacturing sector. This, in turn, can lead to a shift in the comparative advantage, a
decision to open up to trade and an ináow of more productive foreign capital. Consistent with
a set of stylised facts on East Asia and Latin America, we argue that strong property rights are
crucial for success upon globalization