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Democracy and growth: Evidence from a machine learning indicator

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  • Gründler, Klaus
  • Krieger, Tommy

Abstract

We present a novel approach for measuring democracy based on Support Vector Machines, a mathematical algorithm for pattern recognition. The Support Vector Machines Democracy Index (SVMDI) is continuous on the [0,1] interval and enables very detailed and sensitive measurement of democracy for 185 countries in the period between 1981 and 2011. Application of the SVMDI yields results which highlight a robust positive relationship between democracy and economic growth. We argue that the ambiguity in recent studies mainly originates from the lack of sensitivity of traditional democracy indicators. Analyzing transmission channels through which democracy exerts its influence on growth, we conclude that democratic countries feature better educated populations, higher investment shares, and lower fertility rates, but not necessarily higher levels of redistribution.

Suggested Citation

  • Gründler, Klaus & Krieger, Tommy, 2016. "Democracy and growth: Evidence from a machine learning indicator," European Journal of Political Economy, Elsevier, vol. 45(S), pages 85-107.
  • Handle: RePEc:eee:poleco:v:45:y:2016:i:s:p:85-107
    DOI: 10.1016/j.ejpoleco.2016.05.005
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    More about this item

    Keywords

    Democracy; Economic growth; Panel data; Machine learning; Support Vector Machines;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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