Muhammad bin Salman is one of the world’s most secure autocrats. He has no need to pay off rivals or buy elections. Yet by 2030 his government will have spent almost $3trn on Vision 2030, a plan to transform Saudi Arabia’s economy. Officials are backing man-made islands, luxury hotels and electric-vehicle factories. “They will take anything that has the smallest chance of creating economic growth, even if it is in decades,” says a megaproject executive, “even fantasies and failures.”
MBS is one of several autocrats fixated on economic growth.
Gulf monarchs, East African leaders, strongmen in (just about) democratic countries—all are inspired by China and Singapore, which managed to combine authoritarian rule with economic success. Many are willing to adopt orthodox policy. They see growth as a source of legitimacy, seeking to enrich their populations, rather than just elites. As such, they employ skilled technocrats to set policy, try to lure investors with promises of stability and engage in lavish industrial policy. And yet, despite all this, they are increasingly struggling to deliver growth.
China and Singapore are an inspiration for a reason—they stand out. Autocrats have tended to pursue growth haphazardly at best. Kevin Grier of Texas Tech University and Michael Munger of Duke University have found that, from 1950 to 2006, those who managed a decade or more in power produced growth of 1% a year, a measly amount. The worst treated policy as a means of personal enrichment. More often the likes of Suharto in Indonesia and Myanmar’s junta ran the economy in such a manner as to placate elites, apportioning profits to allies while repressing citizens.
The new breed of rulers was first identified in 2015 by Hilary Matfess of the Council on Foreign Relations, a think-tank. She termed them “developmental authoritarians”. Paul Kagame has courted investors by opening Rwanda’s capital account, promising subsidies and sending roadshows across the world. In Ethiopia Abiy Ahmed, who came to power after Ms Matfess’s paper, has scrapped capital controls and floated the birr. In the Gulf ruling families are trying to reduce their dependence on oil. Vietnam may already be South-East Asia’s fastest-growing economy, but To Lam, its new ruler, wants to up the pace.
After all, under Park Chung-hee’s authoritarian rule, which ran from 1963 to 1979, the average South Korean’s income went from that of a sub-Saharan African to that of an eastern European. And whereas South Korea became a democracy, Deng Xiaoping in China showed that there was nothing inevitable about such a transition. Instead, he oversaw strong economic growth and cemented his party’s rule while doing so. Today everyone from Mr Kagame to Indermit Gill, the World Bank’s chief economist, professes admiration for China’s and Singapore’s achievements.
The change of approach reflected demographic trends. In the 2000s economists talked of “authoritarian bargains”, in which despots compensated for the general unpleasantness of life without political rights with handouts. Today populations are too large and too young for such deals. The Gulf is racing against the depletion of oil funds; Ethiopia’s population is forecast to grow by 90m from 2020 to 2050.
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mfw you have all the money in the world, yet you still didn’t read “Why Nations Fail”…
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Muhammad bin Salman is one of the world’s most secure autocrats. He has no need to pay off rivals or buy elections. Yet by 2030 his government will have spent almost $3trn on Vision 2030, a plan to transform Saudi Arabia’s economy. Officials are backing man-made islands, luxury hotels and electric-vehicle factories. “They will take anything that has the smallest chance of creating economic growth, even if it is in decades,” says a megaproject executive, “even fantasies and failures.”
MBS is one of several autocrats fixated on economic growth.
Gulf monarchs, East African leaders, strongmen in (just about) democratic countries—all are inspired by China and Singapore, which managed to combine authoritarian rule with economic success. Many are willing to adopt orthodox policy. They see growth as a source of legitimacy, seeking to enrich their populations, rather than just elites. As such, they employ skilled technocrats to set policy, try to lure investors with promises of stability and engage in lavish industrial policy. And yet, despite all this, they are increasingly struggling to deliver growth.
China and Singapore are an inspiration for a reason—they stand out. Autocrats have tended to pursue growth haphazardly at best. Kevin Grier of Texas Tech University and Michael Munger of Duke University have found that, from 1950 to 2006, those who managed a decade or more in power produced growth of 1% a year, a measly amount. The worst treated policy as a means of personal enrichment. More often the likes of Suharto in Indonesia and Myanmar’s junta ran the economy in such a manner as to placate elites, apportioning profits to allies while repressing citizens.
The new breed of rulers was first identified in 2015 by Hilary Matfess of the Council on Foreign Relations, a think-tank. She termed them “developmental authoritarians”. Paul Kagame has courted investors by opening Rwanda’s capital account, promising subsidies and sending roadshows across the world. In Ethiopia Abiy Ahmed, who came to power after Ms Matfess’s paper, has scrapped capital controls and floated the birr. In the Gulf ruling families are trying to reduce their dependence on oil. Vietnam may already be South-East Asia’s fastest-growing economy, but To Lam, its new ruler, wants to up the pace.
After all, under Park Chung-hee’s authoritarian rule, which ran from 1963 to 1979, the average South Korean’s income went from that of a sub-Saharan African to that of an eastern European. And whereas South Korea became a democracy, Deng Xiaoping in China showed that there was nothing inevitable about such a transition. Instead, he oversaw strong economic growth and cemented his party’s rule while doing so. Today everyone from Mr Kagame to Indermit Gill, the World Bank’s chief economist, professes admiration for China’s and Singapore’s achievements.
The change of approach reflected demographic trends. In the 2000s economists talked of “authoritarian bargains”, in which despots compensated for the general unpleasantness of life without political rights with handouts. Today populations are too large and too young for such deals. The Gulf is racing against the depletion of oil funds; Ethiopia’s population is forecast to grow by 90m from 2020 to 2050.
mfw you have all the money in the world, yet you still didn’t read “Why Nations Fail”…