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Democracy and Economic Growth: A Meta-Analysis

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Author Info
Hristos Doucouliagos () (Deakin University)
Mehmet Ulubasoglu () (Deakin University)

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Abstract

Despite a sizeable theoretical and empirical literature, no firm conclusions have been drawn regarding the impact of political democracy on economic growth. This paper challenges the consensus of an inconclusive relationship through a quantitative assessment of the democracy-growth literature. We apply meta-regression analysis to the population of 470 estimates derived from 81 papers on democracy and growth. Using traditional meta-analysis estimators, the bootstrap and clustered data analysis, and Fixed and Random Effects meta-regression models, we derive several robust conclusions. Taking all the available published evidence together, we conclude that democracy does not have a direct impact on economic growth. However, it has robust, significant and positive indirect effects through higher human capital, lower inflation, lower political instability and higher economic freedom. Democracies may also be associated with larger governments. There are also country- and region-specific democracy-growth effects. Overall, democracy’s net effect on the economy does not seem to be detrimental.

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Publisher Info
Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2006_04.

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Length: 39 pages
Date of creation: 14 Oct 2006
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Handle: RePEc:dkn:econwp:eco_2006_04

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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.:

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    Other versions:
  3. Tavares, Jose & Wacziarg, Romain, 2001. "How democracy affects growth," European Economic Review, Elsevier, vol. 45(8), pages 1341-1378, August. [Downloadable!] (restricted)
  4. Nijkamp, Peter & Poot, Jacques, 2004. "Meta-analysis of the effect of fiscal policies on long-run growth," European Journal of Political Economy, Elsevier, vol. 20(1), pages 91-124, March. [Downloadable!] (restricted)
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  12. Simeon Djankov & Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2005. "The Law and Economics of Self-Dealing," NBER Working Papers 11883, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S158-S183, December. [Downloadable!] (restricted)
  14. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June. [Downloadable!] (restricted)
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  15. Lundstrom, Susanna, 2005. "The effect of democracy on different categories of economic freedom," European Journal of Political Economy, Elsevier, vol. 21(4), pages 967-980, December. [Downloadable!] (restricted)
  16. Xavier Sala-I-Martin & Gernot Doppelhofer & Ronald I. Miller, 2004. "Determinants of Long-Term Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach," American Economic Review, American Economic Association, vol. 94(4), pages 813-835, September. [Downloadable!]
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  17. Sturm, Jan-Egbert & de Haan, Jakob, 2001. "How Robust is the Relationship between Economic Freedom and Economic Growth?," Applied Economics, Taylor and Francis Journals, vol. 33(7), pages 839-44, June. [Downloadable!] (restricted)
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  23. Doucouliagos, Chris & Ulubasoglu, Mehmet Ali, 2006. "Economic freedom and economic growth: Does specification make a difference?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 60-81, March. [Downloadable!] (restricted)
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  26. Chris Doucouliagos, 2005. "Publication Bias in the Economic Freedom and Economic Growth Literature," Journal of Economic Surveys, Blackwell Publishing, vol. 19(3), pages 367-387, 07. [Downloadable!] (restricted)
  27. Bardhan, Pranab, 1993. "Symposium on Democracy and Development," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 45-49, Summer. [Downloadable!] (restricted)
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Cited by:
(explanations, 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. Martin Paldam & Erich Gundlach, 2007. "Two Views on Institutions and Development: The Grand Transition vs. the Primacy of Institutions," Kiel Working Papers 1315, Kiel Institute for the World Economy. [Downloadable!]
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