On Dictatorship, Economic Development and Stability

Note that the steady state does not depend on the choice variable q since it does not enter
the rule of the capital accumulation. The dictator enjoys a total freedom to set the rate
of predation. However, this choice variable has distributional effects. It affects the utility
of the dictator and the consumers. In total, the rate of predation/repression has a big
impact on the consumers’ life-time utility without long-term effect on the economy.

The dictatorships can thus be distinguished along two dimensions: an intertemporal di-
mension represented by ρ and a distributional dimension represented by q. The former
has a level effect on the long-term aggregate output and the latter has a level effect on
the individual utility, which depends on consumption and social order.

These two dimensions may help to account for the large variety of living conditions under
dictatorship and the possibility of very different economic performances, as it is observed
in the empirical literature.

3.2 Local stability of the interior steady state

Proposition 2 The interior steady state of any form of dictatorship is a saddle point.

Proof: see appendix A

Two conclusions can be drawn from propositions 1 and 2. First, in the absence of any
political constraints, all possible behaviors of a dictator are compatible, in our model, with
a unique and locally saddle-path stable interior steady state. Therefore, the economic
constraint (the rule of capital accumulation) does not provide any economic limit to the

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