In this dissertation, I argue that dictators face two principal-agent problems of defection and compliance when they find themselves in the dilemma of empowering local elites via decentralization. On one hand, dictators wish to sufficiently empower local elites that they can deliver effective and efficient governance tailored to local needs. On the other hand, dictators do not wish to empower local elites too much so that they are capable of imposing threats on the political survival of authoritarian rule. Thus, dictators (principal) have to face two principal-agent problems in the management of local elites (agent). First, dictators face the problem of defection if unsatisfied local elites’ governing apparatus switch to aid opposition forces conditional on the party system. The dual installation of decentralization and party system decides if the collision of unsatisfied local elites (insider) with opposition elites (outsider) is incentivized in the equation of regime revision. Second, the problem of compliance refers to the local elites’ violation of central policy. Elected local elites are motivated to over-commit to international investors so that they fail to comply with central policies of maintain credibility in bilateral investment treaties. The two problems are derived from the lack of an ultimate authority to define, interpret and settle disputes between central and local governments under dictatorship. Using statistical models, I explain why some decentralized dictatorships are more resistant to authoritarian breakdown as decentralization is simultaneously installed with single party system; I also ask how decentralization influences authoritarian credulity in bilateral investment treaties that central government signs with foreign countries. I find that decentralization facilitates the signing of BITs in the case of China, but hurts the maintenance of them in dictatorships. Local elites are strategic players in the problem of defection and compliance. The findings are expected to shed light on the literature of political institutions, democratization and international cooperation for authoritarian rule. As the literature of political institutions under authoritarian regime applauds the institutional effect on the political survival of dictatorship, the combined effect of institutions are left out of discussion. Chapter 2 makes a small step forward in this regard. In addition, the linkage between the literature of political institution and international cooperation is of consequence to global order as more and more dictatorships are engaged in international institutions.
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