Throughout history a strong executive with limited constraints on his or her political authority has been a prerequisite for dictatorship. Of course, the ability of autocrats to enjoy these low constraints on their rule requires sufficient revenues to repress and buy loyalty via patronage.

This chapter presents cross-national evidence that remittances can finance authoritarian politics, by lowering the constraints dictators face and extending their time in power. Endogeneity, however, plagues efforts to test whether a causal relationship exists between remittance income and authoritarian politics. To overcome this empirical challenge, I leverage a quasi-natural experiment of oil price–driven remittance flows emanating from the Persian Gulf to non–oil-producing Muslim countries in North Africa, the Middle East, and South Asia.

For many dictators, their longevity and legitimacy depend on their ability to financially support regime supporters and deliver broad-based economic growth, for when this financial capital and growth disappears (or their prospects), so do most of the reasons for allies to remain loyal. For countries determined to industrialize, such as those in Latin America and East and Southeast Asia, attracting sufficient foreign capital has been instrumental in economic development and legitimizing the state’s authoritarian rule.

This chapter presents cross-national evidence that foreign direct investment (FDI), particularly in high fixed cost industries (e.g., oil exploration, petrochemicals), can create rents that an autocrat can use to fund the military. In doing so, these governments are able to retain the loyalty of a key domestic ally. Moreover, for many countries attracting foreign capital is part of a broader strategy of fostering economic growth.

The trends in Chapter 2 provide preliminary evidence of a positive association between international capital inflows and leader survival in less democratic polities. But why should inflows of foreign aid, remittances, and foreign direct investment (FDI) affect the fate of leaders, and do so more in nondemocratic regimes? After all, these capital inflows are received by various actors within an economy and do not all necessarily accrue directly to governments. This chapter develops a theory that explains how governments can use capital inflows to fund strategies of political survival. In particular, international capital can embody nontax properties that enable leaders to finance repression and accumulate loyalty.

A central argument in Chapter 3 is the proposition that autocrats can use nontax income to finance a combination of repression and patronage as a means of extending their tenure in office. While various scholars have investigated the relationship between foreign aid and patronage, there is surprisingly less scholarship evaluating the impact of aid on repression. With this in mind, this chapter presents robust evidence that foreign aid from the world’s largest bilateral – the United States – can harm political rights, expand the powers of dictators, and entrench nondemocratic institutions in recipient states. As this chapter describes in greater detail, one such example is General Siad Barre’s use of US aid to finance his repressive dictatorial rule.

Cross-border flows of foreign aid, foreign direct investment (FDI), and remittances are salient features of the global economy. These transfers involve different actors – firms, governments, and households – in almost every country. For many countries, these capital flows account for a significant share of national income that can potentially affect politics. This raises an important question: can governments harness these foreign capital flows to their political advantage? And if this is the case, how might governments do so? These are the central questions addressed by this book.

Attracting financial capital is essential for economic growth in developing countries, but tragically can often foster nondemocratic politics. Consider, for example, the impact of foreign aid. Since 2008 Ethiopia has been one of the largest recipients of US aid in Africa, averaging around $80 million per year. While the aid is intended to foster economic development, practitioners are growing increasingly wary of its political ramifications. Before the Ethiopian national election in 2010, foreign donors were charged with “subsidizing a regime that is rapidly becoming one of the most repressive and dictatorial on the continent.” Western aid officials “seem reluctant to admit that there are two Prime Minister Meles Zenawis. One is a clubbable, charming African who gives moving speeches at Davos and other elite forums about fighting poverty and terrorism. The other is a dictator whose totalitarianism dates backs to Cold War days.”