The Transparency Curse: Private Information and Political Freedom

September 2015
Research in Economics 69(3)

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I offer a model of the sustainability of authoritarian rule in which the transparency of productive economic activity enables the ruler to distinguish productive economic activity from preparations for rebellion. The less transparent the productive technology the greater the economic side effects of maintaining authoritarian rule, and the stronger the incentives to liberalize the regime. Using a cross section of countries I provide evidence that, consistently with the theory, democratic government Granger causes internet penetration.