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Democracy, goverance and economic growth: Theory and evidence

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Author Info
FRANCISCO RIVERA-BATIZ () (Columbia University - Department of International & Public Affairs)

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Abstract

This paper examines how democracy affects long-run growth by influencing the quality of governance. Empirical evidence is presented first showing that measures of the quality of governance are substantially higher in more democratic countries. A generalequilibrium, endogenous growth model is then built to show how a governanceimproving democracy raises growth. In this model, stronger democratic institutions influence governance by constraining the actions of corrupt officials. Reducing corruption, in turn, stimulates technological change and spurs economic growth. Empirical evidence is presented showing that democracy is in fact a significant determinant of total factor productivity (TFP) growth between 1960 and 1990 in a crosssection of countries. But this contribution occurs only insofar as stronger democratic institutions are associated with greater quality of governance.

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Paper provided by Columbia University, Department of Economics in its series Discussion Papers with number 0102-57.

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Length: 45 pages
Date of creation: 2002
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Handle: RePEc:clu:wpaper:0102-57

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
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  2. Isaac Ehrlich & Francis T. Lui, 1999. "Bureaucratic Corruption and Endogenous Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S270-S293, December. [Downloadable!] (restricted)
  3. Rivera-Batiz, Francisco L., 1988. "Increasing returns, monopolistic competition, and agglomeration economies in consumption and production," Regional Science and Urban Economics, Elsevier, vol. 18(1), pages 125-153, February. [Downloadable!] (restricted)
  4. Alan B. Krueger & Mikael Lindahl, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December. [Downloadable!] (restricted)
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  5. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October. [Downloadable!] (restricted)
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  6. Przeworski, Adam & Limongi, Fernando, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer. [Downloadable!] (restricted)
  7. Mauro, Paolo, 1995. "Corruption and Growth," The Quarterly Journal of Economics, MIT Press, vol. 110(3), pages 681-712, August. [Downloadable!] (restricted)
  8. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995-1), pages 1-118. [Downloadable!]
  9. Levine, Ross, 2001. "International Financial Liberalization and Economic Growth," Review of International Economics, Blackwell Publishing, vol. 9(4), pages 688-702, November. [Downloadable!] (restricted)
  10. Scully, Gerald W, 1988. "The Institutional Framework and Economic Development," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 652-62, June. [Downloadable!] (restricted)
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Cited by:
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  1. Marijana Badjun, 2005. "The quality of governance and economic growth in Croatia," Financial Theory and Practice, Institute of Public Finance, vol. 29(4), pages 279-308. [Downloadable!]
  2. Céline Azémar & Rodolphe Desbordes, 2008. "Public Governance, Health and Foreign Direct Investment in Sub-Saharan Africa," Working Papers 2009_04, Department of Economics, University of Glasgow. [Downloadable!]
  3. Deininger, Klaus & Mpuga, Paul, 2004. "Does greater accountability improve the quality of delivery of public services? Evidence from Uganda," Policy Research Working Paper Series 3277, The World Bank. [Downloadable!]
  4. Cormac Ó Gráda, 2006. "Making Famine History," Working Papers 200610, School Of Economics, University College Dublin. [Downloadable!]
    Other versions:
  5. Albert Saiz, 2002. "Democracy to the road: the political economy of potholes," Working Papers 02-17, Federal Reserve Bank of Philadelphia. [Downloadable!]
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