Informing the Autocrat: Agents, Investment, and Judicial Independence in Authoritarian Regimes Public

Abstract

Most authoritarian regimes lack independent judicial systems, yet many receive high volumes of litigation challenging government action in administrative and economic matters. Surprisingly, even in regimes where judges are hand-picked loyalists courts frequently rule against the regime. Even more surprisingly, there is broad evidence that authoritarian regimes often comply with anti-regime rulings. Extant theories of the role of courts in authoritarian regimes focus on the economic role of independent courts or the political role of dependent courts, and as a result they struggle to make sense of these patterns. In this dissertation, I offer a new theoretical framework that can account for these patterns and provide a logic that explains the economic role of dependent courts in authoritarian regimes. I argue that dictators face a fundamental tension between allowing their agents to engage in illicit corruption, and in attracting investment. This theory views courts as tools that can provide dictators with information that allows them to manage the agent-investment tension. However, I argue that courts provide less trustworthy information as their independence from the regime increases. As a result, courts can alleviate the agent-investment tension, but only if courts are not too independent. I develop a formal model of this theory and derive a number of implications which I then test empirically. I find support for my theoretical framework, and conclude with implications of this theory for scholarly work and policy implementation.

Table of Contents

1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

1.2 Plan of Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2 The Economic Role of Courts in Authoritarian Regimes 8

2.1 Judicial Independence and Compliance in Authoritarian Regimes . . 13

2.1.1 Judicial Independence in Authoritarian Regimes . . . . . . . . 14

2.1.2 Judicial Compliance in Authoritarian Regimes . . . . . . . . . 16

2.2 Theories of Judicial Institutions in Authoritarian Regimes . . . . . . 19

2.2.1 Dependent Judicial Institutions. . . . . . . . . . . . . . . . . . 19

2.2.2 Judicial Institutions and Economic Challenges . . . . . . . . . 22

2.2.3 Empirical Patterns Re-examined . . . . . . . . . . . . . . . . . 26

2.3 The Agent-Investment Tension . . . . . . . . . . . . . . . . . . . . . . 28

2.4 The Dictator's Informational Problem . . . . . . . . . . . . . . . . . . 35

2.5 Courts as a Solution to the Agent-Investment Tension. . . . . . . . . 37

2.6 Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

3 A Formal Model of Judicial Institutions and Investment

in Authoritarian Settings . . . . . . . . . . . . . . . . . . . . . . 43

3.1 The Dictator's Preference . . . . . . . . . . . . . . . . . . . . . . . . . 43

3.2 The Firm's Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

3.3 Model Without a Court . . . . . . . . . . . . . . . . . . . . . . . . . . 46

3.3.1 Players. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

3.3.2 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

3.3.3 Timing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

3.3.4 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

3.3.5 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

3.3.6 Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

3.4 Analysis of a Model Without a Court . . . . . . . . . . . . . . . . . . 51

3.5 Model With a Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

3.5.1 Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

3.6 Analysis of a Model with a Court . . . . . . . . . . . . . . . . . . . . 56

3.6.1 Judge-Type Thresholds . . . . . . . . . . . . . . . . . . . . . . 57

3.6.2 Pooling Equilibria . . . . . . . . . . . . . . . . . . . . . . . . . 58

3.6.3 Pooling Equilibria Comparative Statics . . . . . . . . . . . . . 62

3.7 Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

4 Empirical Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

4.1 Empirical Implications and Hypotheses . . . . . . . . . . . . . . . . . 68

4.1.1 Review, Compliance, and Corruption . . . . . . . . . . . . . . 70

4.2 Empirical Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

4.2.1 Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

4.2.2 Empirical Estimation . . . . . . . . . . . . . . . . . . . . . . . 78

4.2.3 Hypothesis 1: Judicial Independence . . . . . . . . . . . . . . . 82

4.2.4 Hypothesis 2: Review of the Judiciary . . . . . . . . . . . . . . 84

4.2.5 Hypothesis 3: Compliance with the Judiciary . . . . . . . . . . 89

4.2.6 Hypothesis 4: Agent Corruption and Expropriation . . . . . . 91

4.3 Discussion of Empirical Results. . . . . . . . . . . . . . . . . . . . . . 93

5 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

A Empirical Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . 99

A.1 Countries in Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

A.2 Export Commodity to GDP Ratio . . . . . . . . . . . . . . . . . . . . 100

A.3 Instrumental Variable Analysis . . . . . . . . . . . . . . . . . . . . . . 100

B Model Without a Court . . . . . . . . . . . . . . . . . . . . . . . 104

B.1 Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

B.2 Pooling No File. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

B.3 Separating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

B.4 Semi-Separating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

C Model With a Court. . . . . . . . . . . . . . . . . . . . . . . . . . 109

C.1 Firm-Friendly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

C.2 Regime-Aligned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

C.3 Anti-Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

C.4 The Dictator's Choice of Judge and The Firm's Investment Decision 120

C.4.1 Firm Utility Monotonicity. . . . . . . . . . . . . . . . . . . . . 120

C.4.2 Maximum Firm Utility . . . . . . . . . . . . . . . . . . . . . . 122

C.4.3 Dictator Utility Monotonicity . . . . . . . . . . . . . . . . . . . 123

C.4.4 Dictator's Choice of Judge . . . . . . . . . . . . . . . . . . . . 125

C.5 Pooling Equilibria Comparative Statics . . . . . . . . . . . . . . . . . 126

C.5.1 Dictator's Choice of Judge . . . . . . . . . . . . . . . . . . . . 126

C.5.2 Probability of Review . . . . . . . . . . . . . . . . . . . . . . . 127

C.5.3 Probability of Dictator's Compliance. . . . . . . . . . . . . . . 127

C.5.4 Firm's Expected Corruption Level . . . . . . . . . . . . . . . . 128

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

About this Dissertation

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School	Laney Graduate School
Department	Political Science
Degree	Ph.D.
Submission	Dissertation
Language	English
Research Field	Political Science, General
Mot-clé	authoritarian politics judicial politics political economy
Committee Chair / Thesis Advisor	Staton, Jeffrey, Emory University
Committee Members	Gandhi, Jennifer, Emory University Rueda, Miguel, Emory University

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