Compared to geography, legal origins and political institutions, what role do leaders play in economic growth? This question is salient in India given that the challenge of sustaining economic growth might be moving from a single leader to a multi-leader competition mode. While many business leaders in India have advocated for decisive leadership to maintain the momentum of growth, data show that coalition governments performed respectably whenever they were in power. This raises the question of how much a leader matters to economic growth.
That conundrum is also at the heart of the ‘great man theory’ of the world, which British historian John Keegan wrote about. He argued that the political history of the 20th century can be found in the biographies of six men: Lenin, Stalin, Hitler, Mao, Roosevelt, and Churchill.
Providing causal evidence in this area can be complicated because economic growth, good or bad, could throw up certain types of leaders, which may have subsequent effects on growth itself. Economists Benjamin Jones and Benjamin Olken showed that one can use random leadership transitions, from death due to natural causes or an accident, to provide more causal evidence. Using worldwide data from 1945 to 2000 and 57 random leadership transitions, they showed that leaders matter for economic growth, but leadership effects are strongest in autocratic rather than democratic settings. They also found that the channel through which leadership impacts growth was through monetary and fiscal policy, not private investment, and that the deaths of autocrats, particularly extreme autocrats, led to improvements in growth rates. Similarly, Tim Besley and co-authors showed in their 2011 paper, using an expanded dataset between 1875 and 2004, that rather than leaders per se, more educated leaders cause higher periods of growth compared to less educated leaders. They also showed in a 2016 paper that resilient leaders facing a lower probability of being replaced are less likely to reform institutions in the direction of constraining executive power.
Notwithstanding these studies, many questions remain: What else matters besides economic growth? For example, should we consider national security, religiosity, economic inequality? Should specific leadership attributes be explored as being the key to assuring sustained economic growth? For example, how much does it matter whether a leader is from a dynastic versus non-dynastic background? Do married leaders have a bigger impact or single leaders? What about the age of leaders, and whether they were educated in Western democracies, and to what extent they exuded charisma? As political systems across the world continue to tip towards strong leaders, these questions will matter more than ever before.
The writer is a 2018-2019 Campbell and Edward Teller National Fellow in residence at Hoover Institution, Stanford University
