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Property rights in dictatorships: kingsprotect property better than generalsor party bossesCarl Henrik Knutsen a c & Hanne Fjelde b ca Department of Political Science , University of Oslo , Oslo ,Norwayb Department of Peace and Conflict Research , UppsalaUniversity , Uppsala , Swedenc Centre for the Study of Civil War , Peace Research InstituteOslo , Oslo , NorwayPublished online: 05 Apr 2013.

To cite this article: Carl Henrik Knutsen & Hanne Fjelde (2013) Property rights in dictatorships:kings protect property better than generals or party bosses, Contemporary Politics, 19:1, 94-114,DOI: 10.1080/13569775.2013.773205

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Property rights in dictatorships: kings protect property better thangenerals or party bosses

Carl Henrik Knutsena,c∗ and Hanne Fjeldeb,c∗∗

aDepartment of Political Science, University of Oslo, Oslo, Norway; bDepartment of Peace and ConflictResearch, Uppsala University, Uppsala, Sweden; cCentre for the Study of Civil War, Peace Research

Institute Oslo, Oslo, Norway

This paper investigates whether types of dictatorships differ systematically when it comes tothe protection of property rights. Differentiating between monarchies, military regimes, one-party and multiparty autocracies, the paper argues that different dictatorial institutions createdifferent incentives to protect property and enforce contracts by influencing the time horizonof the ruling elite. Where rulers fear losing power and regime insiders are uncertain about theirown political survival beyond the dictator, expropriation of property is more likely to takeplace. The paper reports evidence that monarchic autocracies protect property rightsrelatively well compared to other types of dictatorships, and even when compared todemocracies was found. In these regimes, dynastic succession and certainty about thecomposition of the future elite provide rulers with relatively long time horizons for theirdynasties, reducing incentives to expropriate property for short-term gain.

Keywords: dictatorship; monarchy; one-party regime; property rights; contract rights

1. Introduction

China’s recent economic growth miracle has received much attention and even reopened debates

on whether dictatorial regimes have economic advantages over democracies (see e.g. Gat 2007,

Freeland 2008).1 The Chinese one-party regime, however, is not the only dictatorship pursuing

development-enhancing policies. The United Arab Emirates (UAE) is another, for example

overseeing the development of a substantial financial sector. The combination of a political

system where the rulers of the seven emirates are selected by ‘traditional’ dynastic succession

with ‘modern’ financial centres may seem peculiar at first glance. However, strong protection

of property and contract rights are central to financial development (e.g. North 1990), and

according to the investment profile index (IPI), the UAE has had far stronger protection of prop-

erty and contract rights than, for example, China (see ICRG n.d.). Indeed, the UAE has had IPI

scores on par with Western European democracies such as Denmark and Belgium over the last

decade. Interestingly, other contemporary autocracies with dynastic succession, like Bahrain,

Brunei and Saudi Arabia, also protect property and contract rights quite well, and even poorer

monarchies, like Jordan and Morocco, score fairly high on the IPI.

# 2013 Taylor & Francis

∗Carl Henrik Knutsen is Associate Professor at the Department of Political Science, University of Oslo,Norway. He is co-editor of Governing the Global Economy (Routledge, 2011) and Governance and Knowl-edge (Routledge, 2012), and has published articles in, among others, Electoral Studies, The Journal ofDevelopment Studies and World Development. Email: c.h.knutsen@stv.uio.no∗∗Hanne Fjelde is Assistant Professor at the Department of Peace and Conflict Research, Uppsala Univer-sity, Sweden. She has published articles in, among others, Conflict Management and Peace Science, TheJournal of Conflict Resolution and The Journal of Peace Research.

Contemporary Politics, 2013

Vol. 19, No. 1, 94–114, http://dx.doi.org/10.1080/13569775.2013.773205

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Nevertheless, empirical studies fail to identify any general positive effect of dictatorship on

property rights; actually, the contrary is true (e.g. Knutsen 2011a). Current dictatorships with

poor property rights protection range from Cuba (one-party regime) to Zimbabwe (multiparty

regime) to Myanmar (military regime). That being said, several studies have highlighted the

immense variation among dictatorship in terms of economic policy selection and performance

(e.g. Rodrik 2008). It is likely that differences in formal institutional structures contribute to

the variation. More specifically, the literature has focused on the importance of institutions

that impose constraints on dictators, thus limiting their opportunities to pursue ‘bad’ policies

(see e.g. North and Weingast 1989, Besley and Kudamatsu 2008, Wright 2008).

In this paper, we focus on how institutional structures in dictatorships, and thus different

‘types’ of dictatorial regimes, impact on the protection of property rights. While it is likely

that formal ‘constraining’ institutions, such as parties or legislatures, have favourable impacts

on economic policy selection in dictatorships, we highlight the importance of other institutional

mechanisms. We focus in particular on how the time horizons of political elites influence incen-

tives for protecting property and enforcing contracts, even absent formal institutional structures

that constrain rulers’ policy options (Olson 1993). Where rulers fear losing power and regime

insiders are uncertain about their own political survival beyond the dictator, ‘short-sighted’

expropriation of property for personal gain is more likely to occur. Regime cohesion, dynas-

tic-succession mechanisms and particular elite characteristics might all contribute to mitigate

this uncertainty. In line with this argument, we find evidence that autocratic monarchies

protect property significantly better than other types of dictatorships, including military

regimes, multiparty autocracies and one-party regimes.

In the following, we first briefly review the relevant literature on political regimes and their

economic consequences before presenting arguments on how particular types of dictatorships

affect property rights protection. After introducing the data and research design, we present

the results from our empirical analysis based on an extensive global data set.

2. Dictatorship types and their consequences

Different types of dictatorships vary markedly, for example, in terms of prospects for survival

(e.g. Geddes 1999, Gandhi and Przeworski 2006), probability of democratic transition (e.g.

Hadenius and Teorell 2007b) and probability of experiencing armed conflict (e.g. Fjelde

2010, Weeks 2012). Dictatorial regimes also exhibit variation in the economic policies they

select and in their economic performance. Indeed, dictatorships vary far more in terms of econ-

omic growth rates than democracies (e.g. Przeworski et al. 2000, Besley and Kudamatsu 2008,

Rodrik 2008). One important question is therefore why some dictatorships select policies that

enhance economic performance while others select ‘bad policies’ (Robinson 1998). One

answer relates to differences in the motivations and capabilities of dictators (e.g. Wintrobe

1998). Indeed, there is strong evidence that dictators’ personal characteristics matter for econ-

omic growth (Jones and Olken 2005, Besley et al. 2011). Policy selection in dictatorships

may also be contingent on structural factors, such as ethnic fragmentation and natural resource

abundance (e.g. Miquel 2007, Bueno de Mesquita and Smith 2009).

Political–institutional characteristics also affect economic policy selection, not only in

democracies (e.g. Persson and Tabellini 2004), but also in dictatorships. The dictatorship

category consists of regimes with very different institutional matrixes (e.g. Geddes 1999,

Hadenius and Teorell 2007b), and the literature has focused in particular on institutions that

narrow the set of possible actions the dictator can pursue (e.g. North and Weingast 1989,

Besley and Kudamatsu 2008, Wright 2008). Examples of such ‘constraining institutions’

include relatively independent judiciaries, rule-following bureaucracies, legislatures and strong

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parties. ‘Constraining institutions’ are widely expected to produce superior economic policies and

outcomes, since they may stop rulers from selecting ‘bad policies’ and allow ruling elites to make

credible commitments (e.g. North and Weingast 1989; Gehlbach and Keefer 2011). Wright

(2008) finds evidence that legislatures improve on economic performance in military and one-

party regimes, but not in ‘personalist regimes’. The interpretation is that legislatures enhance

economic performance only in regimes where they are able to constrain the dictator.2

However, dictatorial institutions matter for policy selection not only because they put con-

straints on rulers, but also because they affect rulers’ incentives to pursue particular policies.

Olson (1993) highlights how, for example, dynastic-succession impacts on rulers’ time horizons,

in turn influencing policy selection (see also McGuire and Olson 1996). Leaders with longer time

horizons have fewer incentives to, for example, expropriate property for short-term gain.

Instead, they may pursue policies with long-term macroeconomic benefits in order to collect

more tax revenues in the future. Acemoglu and Robinson (2006a) illustrate how leaders may

reduce public investment and slow down technological development in order to weaken opposi-

tion groups, although the incentives to do so depend on various factors, including institutional

factors. Bueno de Mesquita et al. (2003) show that dictators with small winning coalitions

and large selectorates have incentives to under-provide growth-enhancing public goods, prefer-

ring to distribute private goods to stay in office. Hence, political–institutional factors in dictator-

ships may impact on policy selection through different processes, and their relative importance

may depend on the particular economic policy in question. Below, we focus on property rights

protection.

3. Dictatorship types and property rights protection

Investigating the political determinants of property rights protection is interesting in its own

right. However, studying such relationships is also of interest because of the strong links

between property rights protection and economic performance. Although certain types of prop-

erty redistribution may have beneficial economic effects (progressive land reforms being one

likely candidate (Banerjee and Duflo 2005)), weak property rights protection adds uncertainty

to economic activities and lowers expected profits (e.g. North 1990). For example, the expected

return on investment in physical capital hinges on the probability of holding on to the equipment

and the revenues generated by future production, and the expected return on innovative activities

is crucially affected by physical and intellectual property rights to the results of innovation pro-

cesses (e.g. Romer 1990). Thus, several empirical studies have found that strong property rights

protection enhances capital investment, productivity growth and economic growth (e.g. Knack

and Keefer 1995, Hall and Jones 1999, Acemoglu et al. 2001).

3.1 Institutional constraints and property rights protection

Empirical studies have found that democracies generally have stronger property rights protec-

tion than dictatorships (e.g. Leblang 1996, Adsera et al. 2003, Knutsen 2011a), despite the wide-

spread argument that democracy empowers the relatively poor, who have incentives to

confiscate property from the rich (e.g. Przeworski and Limongi 1993). One prominent expla-

nation holds that there is generally more dispersion of power and stronger institutional con-

straints on executive power in democracies, which reduces the possibilities for leaders to

expropriate property to their own benefit (e.g. North 1990).3

The argument regarding differences in institutional constraints on ruling elites also has

implications for which types of dictatorships are more likely to provide decent property rights

protection. Institutionalised party organisations, for example, may constrain and discipline

96 Carl Henrik Knutsen and Hanne Fjelde

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dictators and their closest collaborators, and could thus be very important in mitigating expro-

priation and fostering credible commitments to protecting property rights (e.g. Gehlbach and

Keefer 2011). This suggests that party-based dictatorships protect property better than other dic-

tatorships, at least if the ruling party’s organisation is relatively broad-based and therefore

cannot be cheaply bought off by redistributing property as private goods (Bueno de Mesquita

et al. 2003). The high frequency of legislatures within party-based dictatorships might also con-

tribute to strong property rights protection (Wright 2008). Among the party-based autocracies,

those that allow for multiple parties might see the strongest property rights protection, as multi-

party competition, to take one example, induces increased transparency and a closer alignment

between citizens’ preferences and economic policy through (limited) political competition.

Based on the level of institutional constraints, we would therefore expect multiparty autocra-

cies to have the strongest property rights protection, followed closely by one-party regimes.

Monarchies and military regimes are expected to be found at the other end of the spectrum,

as these regimes typically have fewer constraints in terms of legislatures, constitutions, courts

and institutionalised party organisations than party-based regimes (Gandhi 2008). Military

regimes also lack institutional separation of control over the military and political power,

which is an important checks-and-balance mechanism that could provide constraints on expro-

priation of private property.

3.2 Time horizons and incentives to protect property

We argue, though, that dictatorial institutions might influence the incentives of ruling elites to

protect property rights through other, and perhaps even more powerful, channels than the con-

straints they put on dictators. Dictatorial institutions shape incentives to pursue particular pol-

icies by influencing the time horizon taken by the dictator and the regime’s constituency, i.e.

the people whose support is necessary to keep the dictator in power.4 In short, leaders who

are uncertain about their hold on power have few incentives to refrain from expropriation or

to invest in legal regimes that enforce contract rights, since – in the short run – the associated

increase in income is lower than pay-offs from forceful confiscation of property (Olson 1993,

McGuire and Olson 1996, Clague et al. 2003). Cukierman et al. (1992) offer the related argu-

ment that governments in contexts of political instability discount the future and seek easy-

to-collect revenue and rely more heavily on seigniorage to finance government budgets.

Hence, dictators are more likely to refrain from the confiscation and repudiation of contracts

when expecting a long tenure, since they may also reap the benefits of a well-functioning

economy in the future. Additionally, if the regime’s constituency is uncertain about their politi-

cal survival beyond the incumbent, they may support forceful expropriation, which yields

immediate income. Conversely, we are likely to see stronger protection of property – even in

the absence of constraining institutions – where there is greater certainty about the future con-

stellation of the elite coalition. Below, we elaborate on this argument’s implications for the

respective dictatorial regime types.

3.2.1 One-party and multiparty regimes

While the ‘constraints argument’ predicts stronger property rights protection in multiparty auto-

cracies, elite incentives for investing in legal regimes that protect property and enforce contracts

might in fact be stronger in one-party regimes. Multiparty autocracies carry an inherent tension

between autocratic practice (centralisation of power in the hands of the incumbent) and demo-

cratic rule (empowerment of opposition through multiple legal parties) (Levitsky and Way

2002). Parties independent of the regime in power provide regime opponents with vehicles

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through which they can contest the regime. Institutionalised opposition could therefore weaken

the regime’s grip on power, and empirical studies show multiparty autocracies are both relatively

short-lived (Hadenius and Teorell 2007b) and prone to political violence (Fjelde 2010). Such

instability could weaken rulers’ incentives to protect property rights. If rulers in multiparty

regimes are worried they will have to exit office relatively quickly, they may prefer to grab prop-

erty for personal gain while still in power. Bates (2008) notes that African dictators, when faced

with multiparty politics, became less secure in power and engaged in more predatory behaviour.

An insecure regime, Bates holds, will discount future pay-offs and penalties that follow oppor-

tunistic deviation (ibid, p. 20). The relative brevity of multiparty autocracies could also shorten

the time horizons of ruling coalitions, as they acknowledge that competing elites could ascend to

positions of power. The uncertainty of whether a new dictator (or the electorate) will favour them

in the distribution of rents and privileges could lead regime insiders to consider expropriation

and other violations of property rights as desirable policy alternatives.

One-party regimes display more cohesion as monopolisation of power with the party, elab-

orate institutions for control over society and the military, and mass-based organisation of sup-

porters all make opposition difficult (Geddes 1999, Hadenius and Teorell 2006). The resulting

longevity of one-party regimes arguably enhances incentives to limit excessive property

rights violations, as this reduces the future resource base from which the regime can extract

revenue (Olson 1993). Furthermore, whereas most dictatorships at some point have rulers

with short time horizons due to succession crises or other factors, elites in one-party regimes

are better able to ensure their likely continuation in the coalition under a new ruler than

regime insiders in other regimes (see e.g. Magaloni 2008). Weeks (2012) notes that in party-

based machines, such as contemporary China, regime insiders tend to rise through the ranks

of the party based on merit and seniority, more than on personal relationships. The regime’s con-

stituency is thus more likely to maintain their privileged positions, even if a new leader comes to

power, as long as the party remains ‘the only game in town’. This predictability likely leads

regime insiders to support investments in property and contract rights that enhance long-term

growth. The same predictability may strengthen the constituency’s power relative to the

current dictator, which could have an independent positive impact on property rights protection

(Besley and Kudamatsu 2008).5

3.2.2 Military regimes

What about the threats to property from dictators who do not rule through party organisations,

but through the armed forces? The time horizon argument also has bearings on military regimes’

incentives to protect property. Military dictatorships are often short-lived (Geddes 1999); one

could therefore expect weak protection of property in such regimes, with leaders eager to expro-

priate property for personal benefit before leaving power. Successive military regimes in

Nigeria, culminating in the kleptocratic rule of Sani Abacha between 1993 and 1998, are

cases in point. While in office, the dictator holds vast powers to place selected members of

the armed forces into positions of privilege based on personal preferences (Magaloni 2008).

So while the officer corps or junta members in military regimes might survive beyond the incum-

bent, the predictability of retaining positions of privilege is generally lower than, for example, in

one-party regimes. The resulting short time horizon of winning-coalition members also suggests

that military regimes have weak property rights protection.

However, some military regimes, at least in recent history, have been supported by economic

elites, which could generate incentives for protecting property rights (e.g. Przeworski and

Limongi 1993, Acemoglu and Robinson 2006b). In Latin America in the 1960s and 1970s,

several right-wing military dictatorships came to power through coups, with either explicit or

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tacit support from economic elites (Smith 2005, pp. 82–83). In these countries, the underprivi-

leged landless poor or workers in urban industries were considered the threats to existing (often

highly inegalitarian) property arrangements. Military regimes have also sometimes voluntarily

returned to their barracks after having achieved an increase in military budgets (Wintrobe

1998, Geddes 1999). Military budgets presumably increase with gross domestic product

(GDP), and military regimes may thus have incentives to protect property rights even if they

are short-lived. Nevertheless, given the assumed importance of incentives generated by short

time horizons, military regimes likely have weaker property rights protection than party-

based regimes and, as made clear below, monarchies.

3.2.3 Monarchies

A slight modification of the time horizon argument indicates that monarchies may protect prop-

erty rights relatively well: if a monarch values the welfare of his son, daughter or any other suc-

cessor, the monarch may want to provide a well-functioning economy as a bequest.6 In

democracies, elections provide an institutional solution to the succession problem. However,

the long dynastic reigns of royal families in Europe and the Middle East shows that it is also

possible to institutionalise succession under dictatorship. Therefore, ‘dynastic succession can

be socially desirable, both because it may reduce the likelihood of succession crises and

because it may give monarchs more concern for the long run and the productivity of their

societies’ (Olson 1993, p. 572). Hence, monarchs could have relatively strong incentives to

protect property rights when compared to other dictators.

The characteristics of winning coalitions in monarchies should also contribute to better prop-

erty rights protection. First, winning coalitions in monarchies have often been largely constituted

by social groups with extensive wealth, who thus have strong incentives to avoid redistributive

transfer of property (Boix 2003, Acemoglu and Robinson 2006b). Historically, monarchies in

Western Europe were shaped by their interactions and relations with fairly well demarcated

elite groups such as the landed aristocracy and clergy. The building of Western European

states involved processes of monarchs expanding their powers at the cost of these powerful

groups, and this sometimes involved the expropriation of property. Indeed, there was a tendency

for European monarchs who held absolute power to engage more often in various forms of

expropriation than monarchs constrained by other institutions (North and Weingast 1989, De

Long and Shleifer 1993). Nevertheless, monarchy came to be seen by the landed interests and

clergy as the best guarantor of political stability and the stability of the property rights

system. In sum ‘the available evidence contradicts the idea of a pre-industrial Europe of all-

powerful monarchs and indiscriminate expropriation’ (Angeles 2011, p. 166); in pre-industrial

(and monarchic) Western Europe, ‘expropriation was an exceptional measure used only in

exceptional circumstances’ (ibid, p. 163). The urgency of continued monarchic rule for the pro-

tection of these elites’ property rights was highlighted by the French Revolution in 1789, the

many revolutionary attempts in 1848 and the Russian revolution in 1917 (e.g. Palmer et al.

2002). Irrespective of whether a post-revolutionary government would be some form of democ-

racy or party-based dictatorship, the continuation of dynastic rule was viewed by European elites

as a stabiliser of existing property rights systems. In the Middle East, monarchies were also seen

as well-equipped to reassure already privileged groups that their benefits would be retained

(Anderson 1991, p. 13).

Second, monarchy has been the historical norm in many countries. Hence, the crude compo-

sition of the winning coalition may have arrived at an ‘equilibrium’ in these old regimes, for

instance, with subsequent generations of landholders and rural notables exchanging political

support for protection of economic privileges. Elites in monarchies often partly derive their

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economic, social and political privilege through lineage, and the aristocracy or ruling family can

expect to retain their privilege independent of individual incumbents’ survival. This high level of

certainty among elites in monarchies, due to the continuity in elite composition, likely reduces

pressures to forcibly seize assets, reinforcing the longer time horizon of leaders. Albertus and

Menaldo (2012) argue that dictators expropriate property from pre-existing elites and redistri-

bute it to their own launching organisations to signal commitment and boost leadership survival.

If monarchs inherit winning coalitions from their fathers, they need not engage in such ‘signal-

ling expropriation’ to the same extent as other dictators. Indeed, a similarity among Middle

Eastern monarchies is the close integration of ruling families and state institutions and bureauc-

racies (Herb 1999). In Saudi Arabia, for example, power and privilege have been vested, through

six successive rulers since the establishment of the kingdom, within the ruling family of the Al

Saud; all key ministers and governmental departmental posts, alongside most regional governor-

ships and high military posts, are held by members of the ruling family. Another example is

Bahrain, where the 1999 succession that brought Sheikh Hamad Al Khalifa into power did

not alter the privileged political and economic position of the ruling tribe of Al Khalifa and

their allied families. Dynastic-succession mechanisms – and the related low uncertainty with

regard to elite composition – therefore suggest that monarchies have stronger property right pro-

tection than other dictatorships.

3.3 Summing up

Based on the arguments relating to level of institutional constraints, multiparty autocracies are

expected to have the strongest property rights protection, closely followed by one-party regimes.

Military regimes are expected to be at the other end of the spectrum, closely followed by mon-

archies. However, expectations are somewhat different when also taking into consideration the

time horizons of rulers and their supporters, and how they are affected by different dictatorial

institutions. Based on our argument above, monarchies should have strong property rights pro-

tection, even if rulers are less constrained by formal institutions. We also expect the institutional

configurations of one-party regimes to expand the time horizons of dictators and ruling

coalitions, thus strengthening incentives to protect property rights. Military regimes are expected

to have weaker property protection, as their rulers and ruling coalition are neither particularly

constrained, nor are they likely to have long time horizons.

4. Operationalisations and data

The currently most common criterion for categorising political regimes in political science is

degree of democracy. Difficult debates on how to conceptualise and measure democracy not-

withstanding (e.g. Munck and Verkuilen 2002), analysts often divide regimes into democracies

and dictatorships. Although this distinction taps important regime characteristics, it disregards

important differences among regimes considered democratic and, perhaps particularly, within

the group considered dictatorial. Such differences are highlighted in extant classifications of dic-

tatorships. Wintrobe (1998), for example, divides dictatorships according to the main motiv-

ations of the dictator and differentiates between tinpots, timocrats, totalitarians and tyrants.

Linz and Stepan (1996) propose multiple defining characteristics related, for example, to the

form of mass mobilisation and role of ideology, resulting in four ideal-typical autocracies,

namely authoritarianism, totalitarianism, post-totalitarianism and sultanism. Other categoris-

ations are based on mixes of institutional characteristics, typical policies pursued and even econ-

omic outcomes; ideal types like ‘developmental regime’ and ‘neopatrimonial regime’ are widely

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used. Yet, little effort has been made to apply these categorisation schemes systematically over

time or across a broader set of cases.

The arguably most influential subdivision of dictatorial regimes in recent comparative poli-

tics is that constructed by Geddes (1999). Geddes differentiates between three main types of dic-

tatorships – single-party, military and personalist – according to who controls access to political

office and determines policy. The number of categories and the related data material have since

been expanded, with, for instance, Wright (2008) adding monarchies as a separate type (see also

Weeks 2012). But coding personalist regimes as a separate type is problematic. First, rulers’ per-

sonal control over offices and policy are characteristics that exist to a greater or lesser extent in

all regimes (Hadenius and Teorell 2007b). Personalism may thus be considered a general, con-

tinuous aspect of regimes rather than a separate regime type. Second, it is difficult to objectively

operationalise and score personalism, particularly since the basis of power relations within the

regime and control over political processes are inherently difficult to observe. When combined

with the assumed outcomes that personalism is associated with, it is likely that subjectivity

biases affect scoring. Would, for example, a regime presiding over a stagnating economy

with weak protection of property rights be more likely to be scored as personalist than a politi-

cally equivalent regime presiding over a high-growth economy with strong property rights pro-

tection? If so, inclusion of a personalist category in regressions on property rights would bias all

regime coefficients.

Based on these considerations, we opted to rely on the classification of dictatorships from

Hadenius and Teorell (2007b). They make an initial division between democracies and dicta-

torships by averaging normalised (between 0 and 10) Polity and Freedom House Index scores;

the upper threshold for being categorised as a dictatorship is 7.5. The subsequent classification

of dictatorships draws on three institutional distinctions: the use of elections and related party

structure, hereditary succession and military control over government.7 An improvement over

Geddes’ classification is the distinction between party-based regimes with only one party

(where no organised opposition is allowed) and those that allow multiple parties (and thus

some degree of competition). As discussed, this distinction is potentially important for prop-

erty rights protection and is particularly interesting given the upsurge in non-democratic

regimes holding multiparty elections starting in the early 1990s (Diamond 2002, Schedler

2002). In our baseline models we distinguish between democracy, monarchy, military, one-

party, multiparty and other dictatorships (which includes Hadenius and Teorell’s ‘No-party

regimes’).

In other models we use three dummy variables scoring the existence of dynastic-succession

mechanisms, military control over government, and parties, respectively. For example, some

military regimes and monarchies have parties, and applying regime-type dummies may therefore

yield imprecise estimates of the effects of the specific institutional characteristics. More specifi-

cally, we run separate models including either the mon or mil dummies from Hadenius and

Teorell (2007a) or a party dummy constructed by adding Hadenius and Teorell’s onep and

mul dummies (p. 9); military regimes and monarchies with parties are therefore also scored 1

on the party dummy. Coding military control over government, for instance, is difficult, and

the data are bound to be associated with measurement error. However, when compared to

other classifications of dictatorship, these data rely on ‘observable’ formal institutional charac-

teristics to a larger extent, and the classification scheme has a clear, logical structure, which

should improve reliability.

The property rights data are from ICRG (n.d). Our main measure is the IPI, which ranges

from 0 to 12. The IPI’s three sub-components, all ranging from 0 to 4, are contract viability/

expropriation risk, profits repatriation and payment delays. In order to measure threats to prop-

erty rights from sources other than government actors, we also employ the law and order index

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(LOI). LOI has a law component, which assesses the strength and impartiality of the legal

system, and an order component, which assesses popular observance of the law. LOI varies

between 0 and 6 (both sub-components range from 0 to 3). Finally, we use the composite prop-

erty rights index (PRI) from Knutsen (2011a), given by PRI ¼ IPI + 2 ∗ LOI.

Although these indices tap different important aspects of property rights protection, they are

not problem-free. First, coverage is limited; the longest time series extend only back to 1984, and

several countries lack data altogether. Fewer observations indicate lower reliability of coeffi-

cient estimates, but may also generate sample-selection biases if observations are not missing

at random. Second, the International Country Risk Guide (ICRG) data are coded by experts,

thus representing subjective evaluations. Such measures may have benefits in terms of validity

relative to more ‘objective’ measures that only partly overlap with, for instance, de facto expro-

priation risk. However, the specific rules and judgements guiding scoring procedures are not

completely clear, and the ICRG indices may be prone to systematic biases akin to those dis-

cussed for personalist regimes. For example, countries with high economic growth could sys-

tematically be scored too high on IPI and LOI (see Henisz 2000), and such biases would be

particularly problematic if correlated with regime type. Still, we think these are the best available

proxies for property rights protection when considering comparable measures with time series

extending beyond two decades.

Table 1 shows average scores on IPI, LOI and PRI for the regime types and reveals inter-

esting patterns. Firstly, democracies and monarchies score much higher on both measures,

and thus also on the composite PRI. There are more moderate differences between the

other dictatorship categories, although military and ‘other dictatorships’ score lower than

the party-based regimes. To further illustrate the differences in IPI distributions, Figure 1

shows box plots for different regimes. For example, the 75th percentile military regime obser-

vation has about the same IPI score as the 25th percentile monarchy observation, and the

75th percentile one-party observation scores just slightly higher. The variation is lower for

military regimes and one-party regimes, though, with, for instance, half the one-party

observations falling between 5 and 6.5, whereas about half the monarchy observations are

between 6 and 10. Multiparty autocracies come closest to monarchies; the 75th percentile

observation falls on the median monarchy score. However, the main story from Figure 1 is

that monarchies are generally associated with better property rights protection than other

dictatorships.

Whether these differences are systematic or not, and whether they can be attributed to other

factors that correlate with both regime type and property rights, is investigated below. First, a

country’s income level may influence property rights protection (e.g. North 1990) and may be

systematically related to specific institutional characteristics (e.g. Przeworski et al. 2000).

Hence, we have controlled for log purchasing power parity-adjusted GDP per capita

(LGDP). Second, we have controlled for log population size (LPOP). GDP and population

data are from the World Development Indicators. Third, natural resource income may affect

both regime type (e.g. Ross 2001) and economic policy (e.g. Mehlum et al. 2006). We have

Table 1. Average scores on property rights indices, by regime type.

Democracy Monarchy Military One-party Multiparty Other dict.

IPI 8.13 (1415) 8.10 (213) 5.01 (343) 5.70 (248) 6.35 (779) 4.59 (123)LOI 4.35 (1415) 4.34 (213) 2.42 (343) 3.41 (248) 3.05 (779) 2.44 (123)PRI 16.83 (1415) 16.78 (213) 9.84 (343) 12.53 (248) 12.45 (779) 9.47 (123)

Note: Number of country (years in parentheses).

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therefore controlled for log income from oil and natural gas (LOIL) using data from Ross

(2011). Fourth we have entered the ethnic fractionalisation index from Alesina et al. (2003),

since ethnic heterogeneity may impact on economic policy selection and correlates with

regime-type characteristics (see e.g. Alesina et al. 2003). Finally, the baseline models

include geographic region (REG) and decade dummies (DEC) to control for region- and

time-specific effects.

5. Empirical analysis

The baseline Model A-I in Table 2, with country-year as unit of analysis and the IPI as the depen-

dent variable, controls for the variables described above and uses the categorisation scheme of

regime types (RETY), with monarchies as the reference category:

IPIi,t = b0 +∑

(bRETY,jRETYj,i,t−1) + bLGDPLGDPi,t−1 + bLPOPLPOPi,t−1

+ bLOILLOILi,t−1 + bEFIEFIi,t−1 +∑

(bREGkREGk,i,t−1) +∑

(bDEClDECl,i,t−1 +i,t ).

In order to incorporate both cross-sectional and intertemporal variation, we mainly ran ordin-

ary least squares with panel-corrected standard errors (OLS with PCSE) models. We also tested

OLS versions of the models in Table 2. The results were generally quite similar to the OLS PCSE

results.8 But, importantly, the OLS PCSE models adjust for panel-specific AR(1) autocorrela-

tion, contemporaneous correlation and heteroscedastic panels. OLS PCSE is particularly

suited for analysing cross-sectional time-series data when, as here, time series are short relative

to the number of cross-sectional units (Beck and Katz 1995).

Figure 1. Box plots: IPI for different types of dictatorships.

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Table 2. The effects of dictatorship types and dictatorial institutions on property rights.

Model

A-I A-II A-III A-IV A-V A-VI A-VII

Dependent variables

IPI LOI PRI IPI IPI IPI IPIb/(t) b/(t) b/(t) b/(t) b/(t) b/(t) b/(t)

Military regime 21.246∗∗∗∗

(23.78)20.689∗∗∗∗

(23.76)22.198∗∗∗∗

(23.61)One-party regime 20.845∗∗

(22.17)20.685∗∗∗∗

(23.36)21.668∗∗

(22.33)Multiparty regime 20.991∗∗∗

(22.96)20.480∗∗∗

(22.70)21.480∗∗

(22.40)Other dictatorial

regime21.542∗∗∗∗

(24.69)20.791∗∗∗∗

(24.25)22.549∗∗∗∗

(24.07)Democracy 20.707∗∗

(22.08)20.428∗∗

(22.35)21.127∗

(21.82)0.297∗∗∗

(2.87)0.641∗∗∗∗

(4.20)0.262∗∗

(2.55)0.708∗∗∗∗

(4.74)Dynastic succession 1.042∗∗∗∗

(3.39)1.336∗∗∗∗

(4.21)Existence of party 0.380∗∗∗

(3.25)0.447∗∗∗∗

(3.94)Military control govt. 20.218

(21.64)20.001

(20.01)Ln GDP per capita 1.038∗∗∗∗

(9.97)0.457∗∗∗∗

(5.71)2.251∗∗∗∗

(12.37)1.051∗∗∗∗

(9.67)1.062∗∗∗∗

(10.39)1.059∗∗∗∗

(9.52)1.052∗∗∗∗

(9.91)Ln population 0.008 (0.16) 20.002

(20.05)0.052 (0.52) 0.000 (0.00) 20.042

(20.83)20.030

(20.57)20.008

(20.16)Ln oil and gas income 20.087∗∗

(22.27)20.011

(20.52)20.091

(21.62)20.086∗∗

(22.19)20.066∗

(21.70)20.072∗

(21.81)20.073∗

(21.87)

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Ethnicfractionalisation

0.067 (0.22) 20.313(21.32)

20.391(20.84)

0.028 (0.09) 0.073 (0.23) 0.101 (0.33) 20.106(20.35)

E. Europe–Soviet 20.362(21.01)

20.669∗∗∗∗

(24.78)21.218∗∗∗

(23.13)20.317

(20.87)20.323

(20.88)20.328

(20.90)20.307

(20.85)Sub-Saharan Africa 0.144 (0.36) 21.050∗∗∗∗

(23.51)21.279∗

(21.89)0.179 (0.45) 0.259 (0.63) 0.221 (0.53) 0.313 (0.78)

Asia 0.008 (0.02) 21.110∗∗∗∗

(24.34)21.361∗∗

(22.23)0.032 (0.07) 0.102 (0.22) 0.097 (0.20) 0.076 (0.16)

M. East–N. Africa 20.917∗

(21.82)21.268∗∗∗∗

(24.69)23.455∗∗∗∗

(23.80)20.951∗

(21.92)20.255

(20.56)20.360

(20.78)20.957∗

(21.95)Latin America 21.282∗∗∗

(23.10)22.032∗∗∗∗

(210.96)24.835∗∗∗∗

(28.21)21.267∗∗∗

(22.99)21.231∗∗∗

(22.91)21.247∗∗∗

(22.95)21.202∗∗∗

(22.86)1980s 21.803∗∗∗∗

(24.70)20.065

(20.37)21.712∗∗∗∗

(23.89)21.790∗∗∗∗

(24.64)21.762∗∗∗∗

(24.61)21.764∗∗∗∗

(24.59)21.769∗∗∗∗

(24.60)1990s 21.587∗∗∗∗

(25.27)0.078

(0.62)21.286∗∗∗∗

(23.98)21.583∗∗∗∗

(25.28)21.560∗∗∗∗

(25.25)21.569∗∗∗∗

(25.26)21.570∗∗∗∗

(25.25)Constant 0.767 (0.53) 1.395

(1.06)20.813

(20.27)20.239

(20.15)20.103

(20.07)0.118 (0.07) 20.558

(20.36)N 2629 2629 2629 2629 2629 2629 2629Countries 122 122 122 122 122 122 122R2 .572 .615 .727 .585 .622 .596 .577

Notes: All models are OLS with PCSE models. Autocratic monarchies is the reference category for political regimes in Models A-I–A-IV. Independent variables are lagged by oneyear in all models. Data are from 1984–2007.∗p , .10.∗∗p , .05.∗∗∗p , .01.∗∗∗∗p , .001.

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Model A-I in Table 2 draws on 2629 observations from 122 different countries with a

maximum time series of 1984–2007; all independent variables are lagged by one year. The

model yields significant differences between the dictatorship types: monarchies have signifi-

cantly stronger property rights protection than military regimes (0.1% level), one-party

regimes (5%), multiparty regimes (1%) and ‘other dictatorships’ (0.1%). A transition from mon-

archy to military regime is estimated to reduce IPI by 1.2. As discussed, there are at least two

reasons why military regimes have poor property protection. First, concentrated military and

political power leaves fewer constraints to safeguard against expropriation. Second, military

regimes are short-lived, resulting in short time horizons for leaders and ruling coalitions. A tran-

sition from monarchy to one-party regime is estimated to reduce IPI by 0.8. Thus, although one-

party regimes could be expected to provide decent property rights protection, the data indicate

they do not protect property as well as monarchies. Model A-I also estimates that monarchies

have significantly (5%) better property protection than democracies. This is surprising given

the strong positive effect of democracy when regimes are measured along a one-dimensional

democracy–dictatorship scale (e.g. Knutsen 2011a).

We also tested versions of Model A-I using regime types other than monarchies as reference

categories to further investigate differences between pairs of regime types. For example, both

one-party and multiparty autocracies have significantly stronger property protection than mili-

tary regimes (10%) and ‘other dictatorships’ (1%). However, there are no significant differences

between one-party and multiparty regimes. Hence, weaker constraints on dictators in one-party

regimes, relative to multiparty regimes, might be counterbalanced by stronger incentives to

protect property in the former, as the time horizon of the dictator and his ruling coalition

might be longer. Our results thus indicate that monarchies have better property rights protection

than party-based dictatorships, which in turn outperform military regimes.

As previously noted, state-led expropriation is not the only threat to property rights; an

environment lacking the rule of law also impinges on the protection of private property. For

this reason, Model A-II uses LOI as the dependent variable. Again, monarchies perform signifi-

cantly better than all other dictatorship types (at least 1%). Furthermore, monarchies also have

significantly better rule of law than democracies (5%). When a monarchy democratises, the LOI

score drops by an estimated 0.4 on the 6-point scale. Model A-III uses PRI as the dependent vari-

able; all regime coefficients remain negative and significant, reinforcing the finding that monar-

chies provide stronger property rights protection than other regimes.

Classifying dictatorial regimes into different ‘types’ is related to a problematic trade-off

between grouping together regimes with quite different institutional characteristics, such as

monarchies with and without parties, and expanding the number of sub-categories, which

makes efficient estimation difficult because of few observations within subgroups. Hence, it

may be preferable to analyse the effects of particular institutional structures, at least in the

absence of complex interaction effects between the institutional structures.

We further investigate the potential effects of dynastic succession, military-regime relations

and parties by utilising the above-described dummies, classifying regimes as either having or not

having these characteristics. The only regime-type variable we retain is the democracy dummy.

In Model A-IV, we test whether hereditary succession, as practised in monarchies, impacts on

IPI. As shown in Table 2, hereditary succession is associated with stronger property rights

protection (significant 0.1%). Hence, we find support for the Olson’s (1993) proposition that suc-

cession mechanisms strengthen property rights protection. Indeed, our results might underesti-

mate the importance of institutionalised succession mechanisms, more generally, as several

non-monarchic dictatorships (with decent property rights protection) have relatively ordered

processes for transferring power. Some party-based regimes, such as present-day China or

Mexico under the PRI, have institutionalised succession in a manner that has provided continuity

106 Carl Henrik Knutsen and Hanne Fjelde

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and likely extended the time horizons of ruling party elites (see e.g. Magaloni 2008). However,

further data collection is needed to test whether the impact of other types of institutionalised suc-

cession mechanisms on property rights resembles that of dynastic succession.

In Model A-V, we test whether dictatorships with at least one party differ from those without

parties and find a significant positive effect (5%) of having parties. In Model A-VI we test

whether military control over political power is associated with property rights protection; the

coefficient is negative with a t-value of 21.64. Finally, we estimate Model A-VII, which con-

tains all three institutional-characteristics dummies. Whereas military control has no effect, both

dynastic succession and parties strengthen property rights. The latter two dummies are both sig-

nificant (0.1%), but whereas having a party is estimated to increase IPI by 0.4, dynastic succes-

sion increases IPI by 1.3. This is quite noteworthy, given the literature’s focus on how political

parties constrain leaders, thus mitigating expropriation risk (e.g. Gehlbach and Keefer 2011); our

results indicate that dynastic-succession mechanisms may be more important for property rights

protection.

We conducted several robustness checks and present a selection of them in Table 3. First, we

conducted a sensitivity analysis, leaving out one control variable or set of dummies at a time

from Model A-I. The results are robust, with two exceptions: when dropping log oil income,

the democracy dummy becomes insignificant, and the one-party dummy is only significant at

10%. However, the other regime dummies remain significant at least at 5%. When leaving

out the region dummies, the democracy, multiparty and one-party dummies become insignifi-

cant. Second, we applied the baseline model only to dictatorial observations (Model B-I in

Table 3), and the results were robust. Third, effects of regime type on property rights might

have a longer time lag than one year (Clague et al. 2003). We therefore tested models

lagging independent variables by three and five years. This further strengthens the monarchy

result; for three-year lags (Model B-II), all regime dummies are negative and significant

(0.1%), and the one-party dummy almost doubles in size.

Fourth, variables omitted from the models above may systematically impact on both regime

type and property rights. Weak-capacity states may be unable to implement proper property

rights protection, and state capacity may also impact on regime selection; weak states might

be more susceptible to military rule, for example. We added the bureaucratic quality index

(BQI) from ICRG as a proxy for state capacity (see Hendrix 2010) to the models in Table 2;

there is a robust positive effect of BQI (significant at least at 5%). However, the regime-type

results are basically unchanged with a few exceptions such as democracy (p ¼ .11) and one-

party regime (p ¼ .12) becoming insignificant in the expanded baseline model. The results

are also basically unchanged when replacing BQI with a measure of historical roots of state insti-

tutions (Statehist5) from Bockstette et al. (2002). Hence, differences in state capacity do not

drive our results. Still, the long duration of many monarchies (e.g. Menaldo 2012) – with

long-lived regimes having consolidated their rule and enjoying a greater capacity to protect

property – might also explain our results. We therefore tested models controlling for log(regime

duration + 1), using data from Polity. However, it is unclear whether this is an appropriate

control, as long-lived regimes may also have longer prospective time horizons because of

greater stability (Clague et al. 2003). We therefore risk controlling for an indirect effect con-

sidered important by our theoretical argument. As expected, regime duration is positively

related to property rights (generally significant at the 1% level). Nevertheless, the different

regime dummies remain negative and significant. Hence, monarchy seems to strengthen prop-

erty rights protection for additional reasons beyond being long-lived.

Fifth, country-specific factors not accounted for above might affect both regime type and

property rights. We ran fixed effects models with errors clustered on country, but because of

infrequent changes to and from different regime types during the short time series, there were

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Table 3. Dictatorship types and property rights, selected robustness checks.

Model

B-I B-II B-III B-IV B-V B-VI B-VII B-VIII

Lag-length ind. var.

1 year 3 years 1 years 1 year 3 years 1 year 1 year 1 yearb/(t) b/(t) b/(t) b/(t) b/(t) b/(t) b/(t) b/(t)

Military regime 21.305∗∗∗∗

(23.87)21.389∗∗∗∗

(24.33)21.037∗∗∗

(23.21)20.519∗∗

(22.13)One-party regime 20.849∗∗

(22.11)21.660∗∗∗∗

(24.40)20.690∗

(21.75)0.010 (0.04)

Multiparty regime 20.947∗∗∗

(22.68)21.450∗∗∗∗

(24.48)20.799∗∗

(22.43)20.026(20.12)

Other dictatorialregime

21.630∗∗∗∗

(24.86)21.409∗∗∗∗

(24.29)21.263∗∗∗∗

(23.81)20.699∗∗∗

(22.69)Democracy 21.175∗∗∗∗

(23.58)20.577∗

(21.72)0.400∗

(1.78)0.289∗

(1.74)0.618∗∗∗∗

(4.02)0.832∗∗∗∗

(5.34)Dynastic

succession1.394∗∗∗∗

(4.42)1.140∗∗∗∗

(3.59)0.553∗∗

(2.35)Existence of party 20.003

(20.02)0.414∗∗∗∗

(3.56)0.390∗∗∗∗

(3.74)Military control

govt.0.100 (0.75) 20.010

(20.08)20.190(21.43)

Monarchy(Geddes–Wright)

0.685∗∗

(2.11)

Ln GDP per capita 0.903∗∗∗∗

(7.88)1.053∗∗∗∗

(9.57)0.998∗∗∗∗

(9.09)0.947∗∗∗∗

(11.87)1.064∗∗∗∗

(9.84)0.995∗∗∗∗

(8.86)0.966∗∗∗∗

(12.60)1.137∗∗∗∗

(9.65)Ln population 0.032 (0.59) 0.047 (1.07) 0.045 (0.81) 0.038 (1.35) 0.047 (1.05) 0.033 (0.58) 0.034 (1.21) 0.198∗∗∗

(2.94)Ln oil and gas

income20.041(21.08)

20.144∗∗∗∗

(23.85)20.079∗∗

(22.14)20.022(21.13)

20.145∗∗∗∗

(23.80)20.069∗

(21.83)20.022(21.20)

20.085∗

(21.82)Ethnic

fractionalisation20.658∗

(21.85)20.276(20.92)

0.016 (0.06) 0.155 (0.90) 20.229(20.75)

20.067(20.24)

0.097 (0.56) 20.620(21.63)

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E. Europe–Soviet 0.324 (0.25) 20.061(20.16)

0.281 (0.72) 20.207(20.89)

20.063(20.16)

0.280 (0.72) 20.142(20.64)

0.841 (1.54)

Sub-SaharanAfrica

1.870 (1.58) 0.127 (0.32) 20.013(20.03)

0.159 (0.66) 0.092 (0.24) 0.082 (0.19) 0.207 (0.89) 2.213∗∗∗∗

(4.52)Asia 1.371 (0.99) 20.029

(20.07)20.335(20.57)

20.150 (0.61) 20.053(20.13)

20.349(20.59)

20.156(20.65)

1.589∗∗∗∗

(3.58)M. East–N. Africa 0.669 (0.49) 21.332∗∗∗

(23.05)20.721(21.57)

20.122(20.42)

21.276∗∗∗

(22.94)20.792∗

(21.76)20.248(20.88)

1.072∗∗

(2.10)Latin America 0.206 (0.15) 21.251∗∗∗

(23.13)21.751∗∗∗∗

(23.93)20.588∗∗

(22.44)21.250∗∗∗

(23.09)21.661∗∗∗∗

(23.54)20.568∗∗

(22.37)– –

1970s 22.629∗∗∗∗

(210.09)22.611∗∗∗∗

(210.08)1980s 21.669∗∗∗∗

(25.65)20.979∗

(21.83)21.814∗∗∗∗

(24.72)22.128∗∗∗∗

(28.66)20.985∗

(21.84)21.791∗∗∗∗

(24.66)22.132∗∗∗∗

(28.80)21.533∗∗∗∗

(24.41)1990s 21.341∗∗∗∗

(25.69)20.722∗

(21.66)21.601∗∗∗∗

(25.29)21.613∗∗∗∗

(27.08)20.718(21.64)

21.590∗∗∗∗

(25.28)21.610∗∗∗∗

(27.05)21.235∗∗∗∗

(24.17)Constant – – 0.295 (0.22) 0.075 (0.05) 7.238∗∗∗∗

(13.99)21.289(20.89)

20.929(20.59)

6.856∗∗∗∗

(12.75)25.923∗∗∗

(23.27)Colon. and relig. dummies N N Y N N Y N NImputed data N N N Y N N Y NN 1431 2601 2629 4624 2601 2629 4624 1035Countries 87 122 122 157 122 122 157 77R2 .613 .507 .578 .496 .507 .587 .500 .605

Notes: All models are OLS with PCSE models with IPI as dependent variable. Autocratic monarchies is the reference category for political regimes in Models B-I–B-IV.Observations are restricted to non-democratic regimes, according to the definition in Hadenius and Teorell (2007b) in Model I and in Wright (2008) in Model VIII. Independentvariables are lagged by one year in Models B-I, B-III–B-IV and B-VI–B-VIII and three years in Models B-II and B-V. Data are from 1984–2007 in Models B-I–B-VII, 1984–2002in Model B-VIII and 1972–2004 in Models B-IV and B-VII, which include imputed data.∗p , .10.∗∗p , .05.∗∗∗p , .01.∗∗∗∗p , .001.

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not enough degrees of freedom to produce efficient estimates. Nevertheless, random effects

models, with clustered errors and controls similar to the OLS PCSE models, produce qualitat-

ively similar results to those reported in Table 2, although some dictatorship-type dummies

were significant only at weaker levels.9 We further controlled for country-fixed factors related

to historical and cultural characteristics: former colonies often adopted the coloniser’s legal

system (La Porta et al. 2008), and legal-system structure may impact on property rights protec-

tion. Additionally, different religions have historically been associated, to some degree, with

different regime types (e.g. Lipset and Lakin 2004), and religion may be correlated with cultural

aspects relevant for property rights. Model B-III in Table 3 therefore includes dummies for his-

torical coloniser and plurality religion from Knutsen (2011b). Adding these controls does not

change the results much, although the one-party and democracy dummies are now only signifi-

cant at 10%.10

Sixth, we included imputed data for missing values on all of the non-regime variables; data

may not be missing at random, which could bias coefficients. We used an imputed data set from

Hegre et al. (2012), generated by Amelia II software (Honaker and King 2010). This expands the

number of observations from 2629 (122 countries) to 4624 (157 countries), with time series now

going from 1972 to 2004. When including imputed data (Model B-IV), the democracy dummy

becomes positive (significant 10%), and the one-party and multiparty dummies are statistically

insignificant. However, monarchies are estimated to protect property significantly better than

both military regimes and ‘other dictatorships’. Hence, monarchies are associated with property

protection on par with or better than all other types of dictatorships.

Finally, we note that strong property rights protection might impact differently on the prob-

ability of the emergence and survival of different regime types, thus biasing our estimates.

However, such potential endogeneity biases are difficult to account for, absent suggestions on

valid instruments for regime types. Menaldo (2012) measures legacy of tribalism based on

land quality, among other things, to instrument for monarchy when studying monarchy’s

impact on political stability in North Africa and the Middle East. Unfortunately, we cannot

apply Menaldo’s instrument for our global data, and land quality and other factors associated

with tribalism may directly impact on property rights, thus violating the exclusion restriction

in our case.11 Interestingly, Menaldo’s analysis indicates the correlation between monarchy

and political stability is largely due to monarchy causing stability. Moreover, studies accounting

for endogeneity when investigating the relationship between degree of democracy and property

rights protection indicate that most of the observed correlation can be attributed to regime type

affecting property rights (Feng 2005, Knutsen 2011a). Although we urge caution when interpret-

ing our results, we therefore consider it plausible that an effect of monarchy on property rights

strongly contributes to the correlation reported here.

We also conducted robustness checks on Model A-VII from Table 2, which includes

dummies for democracy, dynastic succession, existence of party in dictatorship and military

control over government. Model B-V in Table 3 applies three-year lags; this only increases

the size of the dynastic-succession coefficient, which is still significant (0.1%). The dynastic-

succession dummy is also robust in models without party and military dummies, and in

models using five-year lags. In contrast, the party dummy is insignificant and even changes

sign in Model B-V. In Model B-VI, using one-year lags, we added the plurality religion and colo-

niser dummies. Both the dynastic succession and party coefficients are significant here (0.1%),

and so is democracy. This contrasts with the insignificant military-control dummy. The dynastic-

succession coefficient is also significant (5%) in Model B-VII, which includes imputed data.

Hence, dynastic succession is associated with stronger property protection even when account-

ing for potential sample-selection biases. The same holds true for the existence of parties (0.1%

significant), but not for military control over politics. Finally, we applied the monarchy dummy

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from Wright (2008), who extended the data of Geddes (1999), in Model B-VIII. The model finds

that monarchies have significantly better IPI scores than other dictatorships (5%).

6. Conclusion

Previous empirical studies have found that democracies in general protect property better than

dictatorships. However, there are reasons to expect that different types of dictatorships vary

markedly in terms of property rights protection. Indeed, the results presented above indicate

that there are clear differences between autocratic monarchies, military regimes, one-party auto-

cracies and multiparty autocracies in this regard. More specifically, we find that autocratic mon-

archies have stronger protection of property rights than all other types of autocracies, including

one-party autocracies. We even find evidence indicating that autocratic monarchies have stron-

ger property rights protection than democracies, although this result is not robust.

One explanation for our results is that kings and queens have incentives to protect property

because dynastic succession expands their time horizon; monarchs are wary of expropriating

property since this could generate less welfare for their sons or daughters who are to one day

inherit the throne and the economy. Furthermore, monarchs often have durable alliances,

even inherited from their predecessors, with particular elite groups in society. Due to such

stables relationships, members of winning coalitions have often acquired substantial privilege

and wealth over time, meaning they consider ensuring the continuation of their economic privi-

leges, rather than the accumulation of new ones, paramount. This inherent conservatism, coupled

with relatively long time horizons, indicates that strong property rights protection may be pre-

ferred by both the ruler and the winning coalition in monarchies.

Notes

1. We use ‘dictatorial regime’, ‘dictatorship’, and ‘autocracy’ as general terms to refer to non-democraticregimes.

2. Legislatures and parties may also impact on policy selection through other mechanisms: Gandhi (2008)highlights their role in providing forums for cooperation and transmitting information between the dic-tator and various social groups. Furthermore, parties may matter for economic policy selection becausethey affect the types of leaders that tend to be selected (Knutsen and Fjelde 2012).

3. Democracy may also enhance property rights protection by affecting leaders’ incentives. Politicalaccountability mechanisms related to regular elections may reduce incentives for expropriation, asthis reduces voters’ pre-tax incomes (Olson 1993). In dictatorial regimes with small winning coalitions,leaders may compensate supporters by redistributing property as private goods, but this is infeasible inlarge-coalition systems (Bueno de Mesquita et al. 2003).

4. Scholars use different labels for this constituency, for example, the winning coalition (Bueno de Mes-quita et al. 2003), regime insiders (Weeks 2012) or the dictator’s launching organisation (Magaloni2008).

5. Yet there is a more historically contingent argument that might qualify the prediction of strong propertyrights protection under one-party regimes. Marxist regimes have historically been one-party dictator-ships, and many have a history of collectivisation of land and nationalisation of industries. Marxistideology, with its focus on collective ownership of means of production, is one explanation, but ifMarxist regimes’ winning coalitions include, for example, poor industrial workers, nationalisationof industrialists’ capital may be a rational survival strategy.

6. Sometimes other dictators also succeed in securing the leader position for their offspring, such as inKim Il-Sung and Kim Jong-Il’s North Korea and in Assad’s Syria. Other times such attempts fail,as in Mubarak’s Egypt.

7. Additional criteria are used to further distinguish distinct types, like theocratic and transitional regimes.The full classification scheme contains 19 regime types (Hadenius and Teorell 2007a, pp. 5–7).

8. Results not reported in tables are available on request. The dictatorship dummies are often associatedwith higher t-values in OLS models, while the democracy dummy is insignificant in equivalents toModels A-I–A-III. However, we opted for OLS PCSE since autocorrelation and panel-level

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heteroscedasticity are likely to affect standard errors: The test statistic for AR(1) autocorrelation fromBhargawa et al. (1982) – generalising the Durbin–Watson statistic for panel data – is, for instance,.417 for Model A-I, and the hypothesis of no AR(1) autocorrelation is rejected at conventional signifi-cance levels. Likewise, modified Wald tests for panel-level heteroscedasticity clearly reject the hypoth-esis of homoscedastic errors.

9. Hausman tests indicate the differences between fixed and random effects models are systematic. Still,the fixed effects estimates are problematic here because of lack of changes to and from monarchy overthe sample period. Nevertheless, the Hausman tests underline the need to be cautious when interpretingour results, as country-fixed factors may impact both on the probability of having monarchy and onproperty rights.

10. We also tested random effects Tobit models that account for the restricted nature of the dependent vari-ables; we set minimum and maximum values of the different property rights indices as censoringvalues. Although the estimates are in the same direction, the results from the dictatorship-typemodels are weaker than in Table 2; for example, the one-party and multiparty dummies become insig-nificant in the baseline model. However, the dynastic-succession dummy always remains highlysignificant.

11. Nor is it feasible to apply dynamic panel data models (e.g. Arellano and Bond 1991); there are simplynot enough changes to and from monarchy over the sample period to produce efficient estimates.

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