We identify conditions under which the political elite may overcompensate for the loss of de jure power by investing too much in de facto power so that the probability to have de facto power is higher under democracy than under nondemocracy. Then, we consider education and show that, under certain assumptions, the political elite may treat democracy and spending on citizens’ education as substitutes. Using African data and a fixed-effects estimator, we obtain empirical evidence in support of this theoretical prediction.
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