Institutional Quality and the Tenure of Autocrats

A substantial body of literature concludes that nations that maintain market institutions and have limited governments have higher economic growth rates and higher per capita incomes. This conclusion goes back at least to Adam Smith (1937 [1776]), and includes historical studies by Mokyr (1990) and Landes (1998), and institutional analyses by Olson (1996) and Baumol (1990). If the advantages of market institutions are widely recognized, why would the political leadership of any nation not adopt them? One answer often applied to autocracies is that while the general population may be better off with market institutions, the political leadership can obtain personal benefits from more oppressive economic institutions