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The Democratic Transition. A study of the causality between income and the Gastil democracy index

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  • Erich Gundlach
  • Martin Paldam

    ()
    (School of Economics and Management, University of Aarhus, Denmark)

Abstract

The paper considers the transformation of the political system as countries pass through the Grand Transition from a poor developing country to a wealthy developed country. In the process most countries change from an authoritarian to a democratic political system. This is shown by using the Gastil democracy index from Freedom House. First, the basic pattern of correlations reveals that a good deal of the short- to medium-run causality appears to be from democracy to income. Then a set of extreme biogeographic instruments is used to demonstrate that the long-run causality is from income to democracy. The long-run result survives various robustness tests. We show how the Grand Transition view resolves the seeming contradiction between the long-run and the short- to medium-run effects.

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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2008-15.

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Length: 24
Date of creation: 21 Oct 2008
Date of revision:
Handle: RePEc:aah:aarhec:2008-15

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Web page: http://www.econ.au.dk/afn/

Related research

Keywords: Paths of development; democracy; biogeography;

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Cited by:
  1. Gundlach, Erich & Paldam, Martin, 2009. "A farewell to critical junctures: Sorting out long-run causality of income and democracy," European Journal of Political Economy, Elsevier, vol. 25(3), pages 340-354, September.
  2. Erich Gundlach & Martin Paldam, 2008. "The Transition of Corruption: From Poverty to Honesty," Kiel Working Papers 1411, Kiel Institute for the World Economy.

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