This paper focuses on how authoritarianism has led to the economic decline of Sri Lanka. This paper conducts an analysis through a literature review, focusing on the interpretation of existing data and historical information. This is done by analyzing various reports, news articles, research papers, as well as constitutional and legislative literature. This paper focuses on the tax cuts in 2019, the passing of the Twentieth Amendment, the fertilizer crisis, excessive money printing, and the delayed assistance to the IMF. This will discuss the role of authoritarianism in influencing these events, such as the ease of appointing and removing parliamentary positions and one family having control over numerous roles and resources. The example of Chile, a democratic country, that contrasts with the autocracy of Sri Lanka, will be used to demonstrate the distinction between autocracy and democracy. These findings demonstrate the significant impact of autocracy on the Sri Lankan decline. By centralizing power, reducing checks and balances and allowing nepotism, the Rajapaksa administration weakened economic stability, increased inflation and debt. Comparing Sri Lanka to Chile highlights the importance of democracy by showing the advantages of oversight and accountability, emphasizing the role of democracy for sustainable economic growth. This paper offers insights about the repercussions of centralized power and emphasizes the need for policy reforms that transparency and effective institutional framework.