Do Good Institutions Lower the Benefit of Democratization?
AbstractRecent studies have reported positive associations between democratization and economic growth. They have also explored how these associations could differ across regions or income levels. However, might the effects of democratization upon growth also depend upon other factors such as institutions promoting law and order (or the lack thereof)? Using a panel specification, we employ a democratization-law and order interactive term to examine if the effects of democratization upon economic growth depend upon these other institutions. We find that the coefficient on the interaction term is negative. The positive effects of democratization diminish in countries where other institutions are strong. In fact, we find that democratization could even lower growth where the rule of law already prevails.
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Bibliographic InfoPaper provided by University of Cyprus Department of Economics in its series University of Cyprus Working Papers in Economics with number 05-2013.
Length: 46 pages
Date of creation: Mar 2013
Date of revision:
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Web page: http://www.econ.ucy.ac.cy
Democratization; Economic Growth; Institutions;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-30 (All new papers)
- NEP-CDM-2013-03-30 (Collective Decision-Making)
- NEP-FDG-2013-03-30 (Financial Development & Growth)
- NEP-SOC-2013-03-30 (Social Norms & Social Capital)
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