Do Democracies Grow Faster? Revisiting the Institutions and Economic Performance Debate
AbstractThe recent empirical growth literature has proposed three underlying fundamental determinants of economic growth, namely, physical geography, economic integration, and institutional quality. This paper unpacks the final determinant into both political-economic institutions as well as the primarily political institution of democratic development. Using both cross-sectional and panel datasets, we show that, properly instrumented, there is no evidence that democracies grow faster or slower than non-democracies. This result is in contrast to much of the more recent literature, which tend to find a weakly positive relationship. Political economic institutions, however, remain positive and significant determinants of economic growth, which corroborates much of the empirical evidence in the existing literature.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 6076.
Date of creation: Dec 2007
Date of revision:
Economic growth; institutions; democracy;
Find related papers by JEL classification:
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- P51 - Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-12-08 (All new papers)
- NEP-POL-2007-12-08 (Positive Political Economics)
- NEP-SOC-2007-12-08 (Social Norms & Social Capital)
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.:
- Mark Gradstein, 2007. "Inequality, democracy and the protection of property rights," Economic Journal, Royal Economic Society, vol. 117(516), pages 252-269, 01.
- Tamilina, Larysa & Tamilina, Natalya, 2013. "Formal Institutions and the Trust Formation Process: A Psychological Approach to Explain the Relationship between Institutions and Interpersonal Trust," MPRA Paper 49812, University Library of Munich, Germany.
- Thomas Apolte, .
"Democracy and Prosperity in two Decades of Transition,"
200106, Institute of Spatial and Housing Economics, Munster Universitary.
- Thomas Apolte, 2011. "Democracy and prosperity in two decades of transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(4), pages 693-722, October.
- Apolte, Thomas, 2010. "Democracy and prosperity in two decades of transition," CAWM Discussion Papers 26, Center of Applied Economic Research Münster (CAWM), University of Münster.
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