Infrastructure Investments: A Regime Factor

John Gerring, Haakon Gjerløw and Carl Henrik Knutsen

Forthcoming: World Development


A large literature addresses the impact of regimes on domestic policies and outcomes, e.g., education, health, inequality, redistribution, public spending, wages, infrastructure, volatility, productivity, and economic growth. This study focuses on another vital outcome – industrialization – that has yet to be systematically explored using cross-country data. We argue that autocratic leaders are more likely to adopt an economic model of development centered on heavy industry because of three factors that distinguish democratic and autocratic regimes: different social bases, different security concerns, and different policy tools. Accordingly, autocracies have stronger incentives and better capabilities to pursue a rapid and comprehensive course of industrialization. We test this hypothesis using different measures of industrialization in a dataset spanning 200 years and most countries of the world. After a comprehensive series of tests, we conclude that industrialization stands out as one of the few areas where autocracies may enjoy a significant advantage over democracies.