An authoritarian government is one which favours obedience to authority over personal freedoms, political pluralism and democracy. Often, this involves the use of strong central power to maintain the political status quo, without meaningful checks and balances. Such regimes are often notorious for economic mismanagement, as they prioritise the interests of the ruling class over that of the general public. Yet while this has often led to economic stagnation, corruption, and increased poverty, there have also been examples of noted authoritarian economic success stories.

Authoritarian governments often seek to expand their authority by extensively intervening in the economy. Under the leadership of Hugo Chávez and Nicolás Maduro, the ruling United Socialist Party of Venezuela nationalised its oil sector in 2007. This populist policy cemented support for the regime, while allowing the government to use oil revenues to finance its authoritarian rule. Although the intention behind such nationalisation might on the surface be to redistribute wealth and resources more equitably, it often results in inefficiencies and hinders innovation. In Venezuela, mismanagement and corruption have plagued the nationalised oil industry, resulting in a fall in production and revenue due to a lack of efficiency associated with private enterprise. 

Authoritarian governments can also extend their authority over the economy by imposing price controls. In Venezuela, price controls have resulted in chronic shortages of essential goods such as food and medicine, as maximum prices set by the government are often too low to incentivise producers to supply to the market. However, as long as the government can use price controls to direct blame for shortages away from itself and towards ‘profiteering’ retailers, such interventionist policies can cement the power of the ruling class.

Corruption, bribery and embezzlement is another recurrent problem in authoritarian systems which lack meaningful checks and balance. The Corruption Perception Index ranks Venezuela as the fourth most corrupt country in the world, and in 2016 it was reported that upwards of $300 billion may have been embezzled under Hugo Chávez’s regime. Syria, ranked as the third most corrupt country in the world, is purported to have lost around $20 billion in illicit financial outflows in the 2000s, during the presidency of Bashar al-Assad’s Ba’ath Socialist Party. Authoritarian governments are naturally susceptible to higher levels of corruption due to their lack of accountability and transparency.

Finally, authoritarian governments can often destroy their nation’s prospects of international trade by pursuing an extreme policy of self-sufficiency, or ‘autarky’. An example is North Korea’s Juche policy which has seen the country almost completely cut itself off from foreign trade. Similarly, in Zimbabwe under the rule of Robert Mugabe and his ZANU party from 1987-2017, many white and Asian citizens, especially farmers, were expelled from the country to redistribute land to native Zimbabweans. However, a lack of farming expertise resulted in a reduction in food output, resulting in increased food insecurity and hunger. Autarky policies are often pursued by authoritarian governments to cement their own power, as it allows them to draw on populist sentiment while making the ruling class independent of any external power. 

International trade can also be impacted when authoritarian governments attract foreign sanctions. For example, the actions of the Putin regime in Ukraine and elsewhere have resulted in Russian firms having their assets frozen, Russian financial institutions being removed from the SWIFT banking system, and Russian oil exporters seeing their European market disappear. This shows how authoritarian regimes can harm domestic businesses when trying to exert their authority in contravention of international law.

China seems to stand out as an example of a country where authoritarian governance has not hindered economic success; to this day the Chinese Communist Party maintains one-party rule, keeping a tight grip over political dissent. However, on closer inspection, it is clear that the Chinese economic miracle has occurred in spite of its authoritarian government, not because of it. Indeed, China’s growth can be put down to a reduction in state control of the economy and an increase in economic liberalisation. It was Deng Xiaoping’s late-20th century economic reforms which opened China to foreign investment and trade, leading to rapid industrialisation and export-led growth. Special Economic Zones (SEZs) attracted foreign capital, fostering a competitive business environment, while China’s accession to the World Trade Organization (WTO) in 2001 further underscored its commitment to free-market principles, reducing trade barriers and liberalising its financial sector. 

In conclusion, wherever authoritarian regimes attempt to increase arbitrary central control over the economy, they are likely to instigate economic failure. Not only does top-down decision-making result in mismanagement, corruption, and inefficiency, but human rights abuses and military aggression can lead to international isolation and limited opportunities for trade. Where authoritarian governments have achieved economic success, they have almost always embraced some measure of free enterprise and competition.