Using the free market against itself? The strategy of promoting national champions by authoritarian regimes — motivations and limitations

Abstract

After the end of the Cold War it seemed that authoritarian regimes are bound to suffer economic marginalization because command economies proved to be unable to compete with free and open markets. Currently, however, we witness a number of non-democratic, authoritarian States capable of abusing market rules to create an unfair advantage to their undertakings — “National Champions” — competing with other enterprises, which are bound into a tight corset of anti-subsidy regulations, so ultimately to achieve regimes’ political goals. In this context, the paper — based primarily on analysis and review of literature and secondarily on dogmatic analysis — by presenting a set of interlinked political and economic motivations seeks to argue that, on the one hand, strategic rejection of free market doctrine is an inherent feature of authoritarian regimes, and on the other, that inefficiencies endemic in non-democratic forms of governments reduce the likelihood of successful implementation of the eponymous strategy. On this basis, the secondary aim of this paper is to provide a conceptual basis for answering the following question: Considering the need to adapt to long-term effects of the current economic uncertainty, are the strategies of creating undue competitive advantages for national champions pursued by many authoritarian regimes serious enough threat to free markets to warrant a response from the international community.