Prof. Mauro Guillen shared his findings on the effects different governments have on GDP per capita at the 2019 London Wharton Global Forum.

What impact does the head of state have on a country’s GDP?  Do republics deliver a better standard of living for their citizens? These are some of the questions Wharton International Management Prof. Mauro Guillen sought to answer when he analyzed 110 years’ worth¹ of data from 137 countries.

“To tell you the truth, I was quite stunned at the findings,” Guillen said, on stage during a talk at the Wharton Global Forum in London.

While he expected to find evidence to support his theory that republics perform better than monarchies, Guillen found the opposite.

“Across the board, what I found was that no matter the comparisons, monarchies always delivered over this time period, on average, a higher standard of living for the population,” he said. “Even more surprising was the magnitude of the difference.”

His findings had a few caveats, though. Monarchies outperformed other forms of government only if it followed these mechanisms, related specifically to property rights:

  1. Keep Internal Conflict Under Control
    “Countries that have fewer internal conflicts over the distribution of wealth are likely to protect property rights better.”
  2. Reduce Executive Tenure
    Countries that limit governmental leadership terms protect property rights better. “When politicians perpetuate themselves in power, they start doing a lot of crazy things.”
  3. Limit Executive Discretion
    Guillen cited the U.S. “checks and balances” system as an example of reducing a leader’s ability to make decisions on their own, which in turn minimizes the possibility that property will be confiscated in full or in part through taxes or seizures.

“If a monarchy actually uses all three mechanisms, then the increase in per capita income would be about $1,500 per person, per year. These are not small effects,” Guillen said.

Long live the Queen.


¹1900-2010

Posted: November 22, 2019

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