Democracy and Reforms
AbstractWe use a sample of 147 countries to investigate the link between democracy and reforms. Democracy may be conducive to reform, because politicians have the incentive to embrace growth-enhancing reforms to win elections. On the other hand, authoritarian regimes do not have to worry as much about public opinion and may undertake reforms that are painful in the short run but bring future prosperity. We test these hypotheses, using data on micro-economic reforms from the World Bank’s Doing Business database. These data do not suffer the endogeneity issues associated with other datasets on changes in economic institutions. The results provide a robust support for the claim that democracy is good for growth-enhancing reforms.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7151.
Date of creation: Jan 2009
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Other versions of this item:
- K20 - Law and Economics - - Regulation and Business Law - - - General
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- P11 - Economic Systems - - Capitalist Systems - - - Planning, Coordination, and Reform
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-02-28 (All new papers)
- NEP-CDM-2009-02-28 (Collective Decision-Making)
- NEP-LAW-2009-02-28 (Law & Economics)
- NEP-POL-2009-02-28 (Positive Political Economics)
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