Do Leaders Matter? National Leadership and Growth Since World War II

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Abstract
Economic growth within countries varies sharply across decades. This paper examines one explanation for these sustained shifts in growth - changes in the national leader. We use deaths of leaders while in office as a source of exogenous variation in leadership, and ask whether these randomly-timed leadership transitions are associated with shifts in country growth rates. We find robust evidence that leaders matter, particularly in autocratic settings. Moreover, the death of autocrats appears to lead towards improvements in growth. We investigate the mechanisms through which leaders affect growth and find that autocrats affect growth directly, through fiscal and monetary policy. Autocrats also influence political institutions that, in turn, appear to affect growth. In particular, we find that small movements toward democracy following the death of an autocrat appear to improve growth, while dramatic democratizations are associated with reductions in growth. The results suggest that individual leaders can play crucial roles in shaping the growth of nations.

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