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What happens to growth when a long‐term political leader leaves office?
Author(s) -
Kolstad Ivar
Publication year - 2021
Publication title -
governance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.46
H-Index - 76
eISSN - 1468-0491
pISSN - 0952-1895
DOI - 10.1111/gove.12533
Subject(s) - reign , ruler , politics , event (particle physics) , power (physics) , term (time) , event study , political economy , development economics , history , political science , economics , operations management , law , physics , quantum mechanics , context (archaeology) , archaeology
We analyze the economic performance of countries after a multi‐decade political ruler, defined as having been in office 20 or more years, loses power. For 37 countries experiencing such an end‐of‐reign event in the period 1971–2005, we use an event study approach to compare growth in the decade following the event with growth in pre‐event periods. The results show that event countries have below average growth in the year a long‐term political leader leaves office and that cumulative growth in the ensuing decade at best matches and at worst falls significantly short of pre‐event growth levels. Growth contractions are no different following irregular transitions than after regular transitions, suggesting our results are not explained by inadvertent post‐reign turmoil. Our results instead suggest that post‐event contractions may be shaped by deliberate efforts by long‐term leaders to concentrate power while in office and poison the post‐reign economic or political environment.