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Direct Democracy Matters for Economic Performance: An Empirical Investigation

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  • Lars P. Feld
  • Marcel R. Savioz

Abstract

SUMMARY Since the sixties, the discussion whether democracy is a precondition for or a result of economic growth has not yet been finished. In this paper a comparative institutional analysis of the relative performance of direct and representative democratic decision making in the Swiss economy is undertaken using a cross section of the 26 Swiss states in 1989 and pooled cross section time series data for the states from 1982 to 1993. The empirical results and robustness tests support the hypothesis that the stronger control of the representatives by the voters due to obligatory and optional referenda leads to better economic performance. ZUSAMMENFASSUNG Seit den sechziger Jahren diskutieren Sozialwissenschaftler darüber, welche Auswirkungen De‐mokiatie auf das wirtschaftliche Wachstum eines Landes hat. In diesem Aufsatz wird der Einfluss direkt‐ und repräsentativ‐demokratischer Entscheidungsprozesse in einer vergleichenden institutionellen Analyse unter Verwendung von kantonalen Querschnittsdaten für 1989 und gepoolten Querschnitts‐ und Zeitreihendaten für den Zeitraum von 1982 bis 1993 untersucht. Die empirischen Ergebnisse und unterschiedliche Robustheitstests stützen die Hypothese, dass die stärkere Kontrolle der Repräsentanten durch die Stimmbürger mit Hilfe von obligatorischen und fakultativen Referenden zu einer relativ besseren wirtschaftlichen Leistungsfähigkeit führt. RÉSUMÉ La question de savoir si les institutions démocratiques ont un effet positif ou negatif sur le développement économique est discutée depuis les années soixante à soixante‐dix. La présente étude économétrique compare l'effet de différents types d'institutions démocratiques (démocratic représentative et directe) sur le développement économique. A cette fin nous analysons le niveau de développement économique des cantons suisses en fonction de leurs institutions politiques. Les résultats empiriques, qui se révèlent robustes dans différents tests, appuient l'hypothèse qu'un contrǒle plus étroit des élus par le référendum facultatif ou obligatoire conduit à une plus grande performance économique.

Suggested Citation

  • Lars P. Feld & Marcel R. Savioz, 1997. "Direct Democracy Matters for Economic Performance: An Empirical Investigation," Kyklos, Wiley Blackwell, vol. 50(4), pages 507-538, November.
  • Handle: RePEc:bla:kyklos:v:50:y:1997:i:4:p:507-538
    DOI: 10.1111/1467-6435.00028
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