The more veto players in a given political system, the more credibility that a government gains. If a policy has resulted from complex negotiations, then citizens can have more confidence that the government will actually stick to its economic policies, inducing citizens and markets to cooperate with the government. Furthermore, an executive with many checks on their power is inhibited in making rash economic decisions that may upend the market, whereas autocracies have no such constraints.

Why Democracies Handle Economic Crises Better Than Autocracies (Theory)

Autocracies are not beholden to public pressures the way that democracies are, and are therefore less likely to cave to populist demands. Whereas democracies might feel pressured to implement popular policies that are not good for economic growth, autocracies have no such disadvantage. Furthermore, autocracies can act swiftly without checks on their power. 

Autocratic Advantages in Handling Economic Crises

The literature on regime type and economic crisis management generally finds that democracies are more resilient than autocracies in the face of economic shocks and crises. 

Wesleyan University

The perception that autocracies handled the 2008 financial crisis better than democracies—or at least that democracies performed poorly—is largely reinforced by the scholarly literature. Consequently, citizens’ support of democracy has declined across the world, much to the benefit of autocratic political candidates.

The Great Recession and Democracy's Decline in Popularity

Essers, D. (2012). Democracy and external shock resilience in developing countries: Evidence from the Great Recession (No. 2012.02). University of Antwerp, Institute of Development Policy (IOB).

Essers (2012)

Regime Type and Economic Crises

Contrary to the literature on regime type and economic crisis management, the 2008 financial crisis generally demonstrated failures on the part of democracies to counter the Great Recession.

How Democracies Handled the Great Recession

Over the course of the economic crisis in Europe, support for democracy declined by 7% on average. Countries that were particularly hard-hit saw declines in support for democracy of up to 46%. By 2011, only 50% of Europeans reported being satisfied with the way democracy worked in their specific countries.


Decline in the Popularity of Democracy After 2008

The scholarly literature on autocratic regimes and their response to the Great Recession mostly focuses on China’s response to the crisis. 

Learn Before

Related

Learn After