  One frequently given explanation for why autocrats maintain corrupt and
inefficient institutions is that the autocrats benefit personally even though
the citizens of their countries are worse off. The empirical evidence does not
support this hypothesis. Autocrats in countries with low-quality institutions
do tend to be wealthy, but typically, they were wealthy before they assumed
power. A plausible explanation, consistent with the data, is that wealthy
individuals in countries with inefficient and corrupt institutions face the
threat of having their wealth appropriated by government, so have the incentive
to use some of their wealth to seek political power to protect the rest of
their wealth from confiscation. While autocrats may use government institutions
to increase their wealth, autocrats in countries with low-quality institutions
tend to be wealthy when they assume power, because wealthy individuals have the
incentive to use their wealth to acquire political power to protect themselves
from a potentially predatory government.
