When do authoritarian rulers educate: Trade competition and human capital investment in Non-Democracies

Abstract

This paper explains variations in education spending among non-democracies, focusing on policy interdependence by trade competition. Facing pressures from spending changes in competitor countries, rulers calculate the costs and benefits associated with increased education spending: education increases labor productivity; it also increases civil engagement and chances of democratization. Therefore, we expect that rulers in countries whose revenues depend less on a productive labor force and those with shorter time horizons are less likely to invest because of lower expected benefits; rulers with single-party regimes, authoritarian legislatures, and especially partisan authoritarian legislatures are more likely to invest because such institutions enable them to better survive the threats associated with increased human capital. We find empirical support for policy interdependence and the conditional effects of government revenue source, time horizon, and partisan legislatures.