IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Does democratization facilitate economic liberalization?

Listed author(s):
  • Rode, Martin
  • Gwartney, James D.

Previous empirical studies have found that the institutions and policies of democracies are generally more supportive of economic freedom than authoritarian political regimes. This paper employs a new dataset by Cheibub et al. (2010) to examine the impact of transitions to democracy on economic freedom. The dataset identifies 48 political transitions from authoritarianism to democracy since the mid-1970s, for which the data on economic freedom are available. Both cross-sectional and panel data analyses are employed to examine these transitions within the framework of fixed- and random effects models. The results indicate that transitions to democracy are associated with subsequent increases in economic liberalization as measured by changes in the Economic Freedom of the World index. Moreover, the economic liberalization appears to follow the path of an inverted U, ascending for approximately 10years after the democratic transition, but receding thereafter. There was also evidence that stable (long-term) democracies achieved larger increases in economic freedom than authoritarian regimes, while unstable democratic transitions adversely affected economic liberalization.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.sciencedirect.com/science/article/pii/S0176268012000420
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 28 (2012)
Issue (Month): 4 ()
Pages: 607-619

as
in new window

Handle: RePEc:eee:poleco:v:28:y:2012:i:4:p:607-619
DOI: 10.1016/j.ejpoleco.2012.07.001
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505544

References listed on IDEAS
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.:

as
in new window

  1. Milner, Helen V. & Kubota, Keiko, 2005. "Why the Move to Free Trade? Democracy and Trade Policy in the Developing Countries," International Organization, Cambridge University Press, vol. 59(01), pages 107-143, January.
  2. Clifford F. Thies, 2007. "The Relationship Between Political and Economic Freedom Reconsidered," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 22(Spring 20), pages 95-118.
  3. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
  4. Hans Pitlik, 2007. "The Impact of Growth Performance and Political Regime Type on Economic Policy Liberalization," WIFO Working Papers 300, WIFO.
  5. James D . Gwartney & Randall G . Holcombe & Robert A . Lawson, 2006. "Institutions and the Impact of Investment on Growth," Kyklos, Wiley Blackwell, vol. 59(2), pages 255-273, 05.
  6. Torsten Persson & Guido Tabellini, 2006. "Democracy and Development: The Devil in the Details," Levine's Bibliography 122247000000001139, UCLA Department of Economics.
  7. Berggren, Niclas, 2003. "The Benefits of Economic Freedom: A Survey," Ratio Working Papers 4, The Ratio Institute.
  8. Gérard Roland, 2004. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 026268148x, September.
  9. Arellano, Manuel, 2003. "Panel Data Econometrics," OUP Catalogue, Oxford University Press, number 9780199245291.
  10. Potrafke, Niklas, 2012. "Islam and democracy," Munich Reprints in Economics 19273, University of Munich, Department of Economics.
  11. Berggren, Niclas & Bergh, Andreas & Bjørnskov, Christian, 2012. "The growth effects of institutional instability," Journal of Institutional Economics, Cambridge University Press, vol. 8(02), pages 187-224, June.
  12. Manuel Vega-Gordillo & José L. à lvarez-Arce, 2003. "Economic Growth and Freedom: A Causality Study," Cato Journal, Cato Journal, Cato Institute, vol. 23(2), pages 199-215, Fall.
  13. Rodrik, Dani, 2000. "Institutions For High-Quality Growth: What They Are And How To Acquire Them," CEPR Discussion Papers 2370, C.E.P.R. Discussion Papers.
  14. John W. Dawson, 2001. "Causality in the Freedom-Growth Relationship," Working Papers 01-04, Department of Economics, Appalachian State University.
  15. Benyishay, Ariel & Betancourt, Roger R., 2010. "Civil liberties and economic development," Journal of Institutional Economics, Cambridge University Press, vol. 6(03), pages 281-304, September.
  16. Elias Papaioannou & Gregorios Siourounis, 2008. "Democratization and Growth," Working Papers 00027, University of Peloponnese, Department of Economics.
  17. Lawson, Robert A. & Clark, J.R., 2010. "Examining the Hayek-Friedman hypothesis on economic and political freedom," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 230-239, June.
  18. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, 09.
  19. Cooray, Arusha & Potrafke, Niklas, 2011. "Gender inequality in education: Political institutions or culture and religion?," Munich Reprints in Economics 20110, University of Munich, Department of Economics.
  20. Pitlik, Hans, 2002. "The Path of Liberalization and Economic Growth," Kyklos, Wiley Blackwell, vol. 55(1), pages 57-79.
  21. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
  22. Pitlik, Hans & Wirth, Steffen, 2003. "Do crises promote the extent of economic liberalization?: an empirical test," European Journal of Political Economy, Elsevier, vol. 19(3), pages 565-581, September.
  23. Dani Rodrik & Romain Wacziarg, 2005. "Do Democratic Transitions Produce Bad Economic Outcomes?," American Economic Review, American Economic Association, vol. 95(2), pages 50-55, May.
  24. Niklas Potrafke, 2010. "Does government ideology influence deregulation of product markets? Empirical evidence from OECD countries," Public Choice, Springer, vol. 143(1), pages 135-155, April.
  25. Francesco Giavazzi & Guido Tabellini, 2004. "Economic and Political Liberalizations," Working Papers 264, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  26. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
  27. Jakob De Haan & Susanna Lundström & Jan-Egbert Sturm, 2006. "Market-oriented institutions and policies and economic growth: A critical survey," Journal of Economic Surveys, Wiley Blackwell, vol. 20(2), pages 157-191, 04.
  28. Wu, Wenbo & Davis, Otto A, 1999. "The Two Freedoms, Economic Growth and Development: An Empirical Study," Public Choice, Springer, vol. 100(1-2), pages 39-64, July.
  29. Martin Rode & Sebastian Coll, 2012. "Economic freedom and growth. Which policies matter the most?," Constitutional Political Economy, Springer, vol. 23(2), pages 95-133, June.
  30. repec:cto:journl:v:18:y:1998:i:2:p: is not listed on IDEAS
  31. Dutt, Pushan & Mitra, Devashish, 2002. "Endogenous trade policy through majority voting: an empirical investigation," Journal of International Economics, Elsevier, vol. 58(1), pages 107-133, October.
  32. Xavier Vanssay & Vincent Hildebrand & Zane Spindler, 2005. "Constitutional Foundations of Economic Freedom: A Time-Series Cross-Section Analysis," Constitutional Political Economy, Springer, vol. 16(4), pages 327-346, December.
  33. Bjørnskov, Christian & Potrafke, Niklas, 2012. "Political ideology and economic freedom across Canadian provinces," Munich Reprints in Economics 20277, University of Munich, Department of Economics.
  34. Jan Fidrmuc, 2001. "Economic Reform, Democracy and Growth During Post-Communist Transition," William Davidson Institute Working Papers Series 372, William Davidson Institute at the University of Michigan.
  35. Irene Vlachaki & Sarantis Kalyvitis, 2011. "When does more aid imply less democracy? An empirical examination," DEOS Working Papers 1125, Athens University of Economics and Business.
  36. Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
  37. W. Kenn Farr & Richard A. Lord & J. Larry Wolfenbarger, 1998. "Economic Freedom, Political Freedom, and Economic Well-Being: A Causality Analysis," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 247-262, Fall.
  38. Klomp, Jeroen & de Haan, Jakob, 2009. "Political institutions and economic volatility," European Journal of Political Economy, Elsevier, vol. 25(3), pages 311-326, September.
  39. José Aixalá & Gema Fabro, 2009. "Economic freedom, civil liberties, political rights and growth: a causality analysis," Spanish Economic Review, Springer;Spanish Economic Association, vol. 11(3), pages 165-178, September.
  40. Minier, Jenny A, 1998. "Democracy and Growth: Alternative Approaches," Journal of Economic Growth, Springer, vol. 3(3), pages 241-266, September.
  41. Efendic, Adnan & Pugh, Geoff & Adnett, Nick, 2011. "Institutions and economic performance: A meta-regression analysis," European Journal of Political Economy, Elsevier, vol. 27(3), pages 586-599, September.
  42. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
  43. Zhenhui Xu & Haizheng Li, 2008. "Political freedom, economic freedom, and income convergence: Do stages of economic development matter?," Public Choice, Springer, vol. 135(3), pages 183-205, June.
  44. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
  45. de Haan, Jakob & Sturm, Jan-Egbert, 2003. "Does more democracy lead to greater economic freedom? New evidence for developing countries," European Journal of Political Economy, Elsevier, vol. 19(3), pages 547-563, September.
  46. José Cheibub & Jennifer Gandhi & James Vreeland, 2010. "Democracy and dictatorship revisited," Public Choice, Springer, vol. 143(1), pages 67-101, April.
  47. Adam, Antonis & Delis, Manthos D & Kammas, Pantelis, 2009. "Are democratic governments more efficient?," MPRA Paper 15843, University Library of Munich, Germany.
  48. de Haan, Jakob & Siermann, Clemens L J, 1998. "Further Evidence on the Relationship between Economic Freedom and Economic Growth," Public Choice, Springer, vol. 95(3-4), pages 363-380, June.
  49. Carden Art & Lawson Robert A., 2010. "Human Rights and Economic Liberalization," Business and Politics, De Gruyter, vol. 12(2), pages 1-20, August.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:28:y:2012:i:4:p:607-619. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.