One of the lingering questions for development economists is that of economic transition and whether development can be promoted by a strong political leader. Earlier writings on leadership and economic development tend to fall into one of two camps: (1) leaders matter and can contribute positively to economic growth, or (2) leaders seldom have positive effects and, at best, can avoid doing a great deal of harm. This article establishes a third option—a middle-ground position—between these two views. Good leadership can, indeed, have a positive effect on economic growth but only during the initial moment when economic reform is up for grabs. Once the opportunity to implement sweeping reform has passed, interests become entrenched, and the opportunity for growth-enhancing reform passes. Bad leaders, on the other hand, can hamper economic growth in periods well beyond the ideal reform moment.
The Oxford Handbook of Austrian Economics is available through Oxford University Press.