As a previous post showed, autocracies have high variance of growth outcomes (also illustrated in the graph above). The usual interpretation is that benevolent autocrats cause good outcomes while malevolent autocrats cause bad growth outcomes. Democracy has checks and balances that prevents malevolent people from having too much power to generate bad outcomes, but also restrains the good ones from doing what they want to achieve the great outcomes.
Unless this is completely wrong. Autocracy is only one dimension of society, after all, and is heavily correlated with other dimensions that could cause high dispersion of development outcomes, such as dependence on commodity exports, dependence on agriculture, civil wars, and … BAD STATISTICIANS (?!)
Bad statisticians make a lot of measurement mistakes. Average growth over 1960-2008 might have zero mistake ON AVERAGE, but there will randomly be some countries with a string of exaggerated growth rates. Other countries will randomly have a string of underestimated growth rates. So the variance of growth will be higher the worse the data quality – which is exactly what we see in the picture.
Of course, I am not saying China or Singapore or Taiwan have high growth (and Liberia has horrible growth) ONLY because of measurement error. Other indicators confirm the East Asian booms — but are we really sure growth was 6 percent per capita per year, instead of 4 percent per capita per year?
How bad is bad quality data? Alwyn Young at LSE has a fascinating recent paper in which he points out:
although the on-line United Nations National Accounts database provides GDP data in …constant prices for 47 sub-Saharan countries for each year from 1991 to 2004, the UN statistical office which publishes these figures had, as of mid-2006, actually only received data for just under half of these 1410 observations and had, in fact, received no constant price data, whatsoever, on any year for 15 of the countries for which the complete 1991-2004 on-line time series are published.
So for 15 African countries, “bad quality data on real GDP growth” really means “NO data on real GDP growth”.
Next time you are praising an autocrat for a glorious growth record, remember you may really just be praising an incompetent statistician.