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Economic freedom, democracy and economic growth: a causal investigation in transition countries

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  • Dawid Piątek
  • Katarzyna Szarzec
  • Michał Pilc

Abstract

This article addresses the issue of causality in the relationship between political and economic freedom and economic growth in transition countries. This problem has been discussed in the literature but the results concerning political freedom and economic growth are still ambiguous. Moreover, owing to the impact of time we now have at our disposal significantly longer time series, which in this kind of research is especially important. The analysis was conducted for 25 post-socialist countries for 1990--2008 using a set of 20 indicators of economic and political freedom and Granger causality tests. The results show that although economic freedom has a positive impact on economic growth in transition countries, political freedom is neutral for economic growth; changes in the level of political freedom are however influenced by economic growth.

Suggested Citation

  • Dawid Piątek & Katarzyna Szarzec & Michał Pilc, 2013. "Economic freedom, democracy and economic growth: a causal investigation in transition countries," Post-Communist Economies, Taylor & Francis Journals, vol. 25(3), pages 267-288, September.
    • Handle: RePEc:taf:pocoec:v:25:y:2013:i:3:p:267-288
    DOI: 10.1080/14631377.2013.813137
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    2. Dawid Piatek, 2016. "Institutions and economic growth in transition countries — new experiences and implications from financial crisis 2007–2010 (Part 2)," Ekonomia i Prawo, Uniwersytet Mikolaja Kopernika, vol. 15(4), pages 527-545, December.
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    7. Andrzej Kacprzyk, 2016. "Economic freedom–growth nexus in European Union countries," Applied Economics Letters, Taylor & Francis Journals, vol. 23(7), pages 494-497, May.
    8. Kant, Chander, 2018. "Privatization and growth: natural experiments of European economies in transition," MPRA Paper 90302, University Library of Munich, Germany.
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    12. Salahodjaev, Raufhon, 2015. "Democracy and economic growth: the role of intelligence in cross-country regressions," MPRA Paper 65716, University Library of Munich, Germany, revised 26 Apr 2015.
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    15. Yilmaz Bayar, 2016. "Impact of Openness and Economic Freedom on Economic Growth in the Transition Economies of the European Union," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 14(1), pages 7-19.
    16. Ivana Brkić & Nikola Gradojević & Svetlana Ignjatijević, 2020. "The Impact of Economic Freedom on Economic Growth? New European Dynamic Panel Evidence," JRFM, MDPI, vol. 13(2), pages 1-13, February.
    17. Malgorzata Zielenkiewicz, 2015. "The Role Of The Level Of Development, Geographical Factors, And Culture For The Efficacy Of Economic Freedom," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 10(4), pages 85-98, December.
    18. Assi, Ala Fathi & Zhakanova Isiksal, Aliya & Tursoy, Turgut, 2020. "Highlighting the connection between financial development and consumption of energy in countries with the highest economic freedom," Energy Policy, Elsevier, vol. 147(C).
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    20. M. Adnan Kabir & Najib Alam, 2021. "The Efficacy of Democracy and Freedom in Fostering Economic Growth," Emerging Economy Studies, International Management Institute, vol. 7(1), pages 76-93, May.
    21. Joshi, Prathibha & Beck, Kris, 2021. "Economic Growth and the Rise of Democracy: A Granger Causality Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(4), pages 389-414.
    22. Assi, Ala Fathi & Zhakanova Isiksal, Aliya & Tursoy, Turgut, 2021. "Renewable energy consumption, financial development, environmental pollution, and innovations in the ASEAN + 3 group: Evidence from (P-ARDL) model," Renewable Energy, Elsevier, vol. 165(P1), pages 689-700.
    23. Jeffrey Kouton, 2019. "Relationship between economic freedom and inclusive growth: a dynamic panel analysis for sub-Saharan African countries," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 21(1), pages 143-165, June.
    24. Patricia Born & Douglas Bujakowski, 2022. "Economic transition and insurance market development: evidence from post-communist European countries," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 47(1), pages 201-237, March.
    25. Olalekan C. Okunlola & Olumide A. Ayetigbo, 2022. "Economic Freedom and Human Development in ECOWAS: Does Political-Institutional Strength Play a Role?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 1751-1785, September.

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