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Democracy & Growth

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  • Robert J. Barro

Abstract

Growth and democracy (subjective indexes of political freedom) are analyzed for a panel of about 100 countries from 1960 to 1990. The favorable effects on growth include maintenance of the rule of law, free markets, small government consumption, and high human capital. Once these kinds of variables and the initial level of real per-capita GDP are held constant, the overall effect of democracy on growth is weakly negative. There is a suggestion of a nonlinear relationship in which democracy enhances growth at low levels of political freedom but depresses growth when a moderate level of freedom has already been attained. Improvements in the standard of living - measured by GDP, life expectancy, and education - substantially raise the probability that political freedoms will grow. These results allow for predictions about which countries will become more or less democratic in the future.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4909.

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Date of creation: Oct 1994
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Publication status: published as Barro, Robert J. "Democracy And Growth," Journal of Economic Growth, 1996, v1(1,Mar), 1-27.
Handle: RePEc:nbr:nberwo:4909

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  13. Alberto Alesina & Roberto Perotti, 1993. "Income Distribution, Political Instability, and Investment," NBER Working Papers 4486, National Bureau of Economic Research, Inc.
  14. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December.
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  17. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation for Research in Economics, Yale University.
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  19. 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.
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Citations

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Cited by:
  1. Christopher A. Sims, 1996. "Inflation and growth - commentary," Proceedings, Federal Reserve Bank of St. Louis, issue May, pages 173-178.
  2. Pedro Vieira & Aurora Teixeira, 2006. "Human Capital and Corruption: A microeconomic model of the bribes market with democratic contestability," Notas Económicas, Faculdade de Economia, Universidade de Coimbra, issue 23, pages 72-82, June.
  3. David Stasavage, 2000. "Private investment and political uncertainty," LSE Research Online Documents on Economics 6653, London School of Economics and Political Science, LSE Library.
  4. Mulligan Casey B & Gil Ricard & Sala-i-Martin Xavier X, 2010. "Social Security and Democracy," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-46, March.
  5. Johannes Fedderke & Robert Klitgaard & Kamil Akramov, 2011. "Heterogeneity Happens: How Rights Matter in Economic Development," Working Papers 220, Economic Research Southern Africa.
  6. Tapio Palokangas, 2005. "Common markets, economic growth, and creative destruction," Journal of Economics, Springer, vol. 86(1), pages 57-76, December.
  7. Easterly, William, 2000. "the middle class consensus and economic development," Policy Research Working Paper Series 2346, The World Bank.
  8. Coolidge, Jacqueline & Rose-Ackerman, Susan, 1997. "High-level rent-seeking and corruption in African regimes : theory and cases," Policy Research Working Paper Series 1780, The World Bank.
  9. Fabrizio Carmignani, 2001. "Theory and Evidence on the Political Economy of Growth," Working Papers 33, University of Milano-Bicocca, Department of Economics, revised Jan 2001.
  10. de Haan, Jakob & Sturm, Jan-Egbert, 2000. "On the relationship between economic freedom and economic growth," European Journal of Political Economy, Elsevier, vol. 16(2), pages 215-241, June.
  11. Sobel, Andrew C., 2003. "National governance and global lending," Journal of International Management, Elsevier, vol. 9(3), pages 287-304.
  12. Clague, Christopher & Keefer, Philip & Knack, Stephen & Olson, Mancur, 1996. "Property and Contract Rights in Autocracies and Democracies," MPRA Paper 25720, University Library of Munich, Germany.
  13. Johannes Fedderke, 2001. "Growth and institutions," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(6), pages 645-670.
  14. Fedderke, J. W. & de Kadt, R. H. J. & Luiz, J. M., 2001. "Indicators of political liberty, property rights and political instability in South Africa: 1935-97," International Review of Law and Economics, Elsevier, vol. 21(1), pages 103-134, March.

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