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Democracy, State Capacity, and Economic Growth

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  • Knutsen, Carl Henrik

Abstract

This paper discusses how regime type and state capacity may interact in affecting economic growth. The empirical analysis finds a positive and robust effect of democracy on growth in Sub-Saharan Africa, a continent historically characterized by weak-capacity states. Furthermore, the paper identifies a robust interaction effect between democracy and state capacity on growth, both in Africa and globally; the effect of democracy on growth increases when state capacity is reduced. Democracy is estimated to have a positive effect on growth in weak-capacity states, but not in high-capacity states. Additionally, the results indicate that state capacity enhances growth only in dictatorships.

Suggested Citation

  • Knutsen, Carl Henrik, 2013. "Democracy, State Capacity, and Economic Growth," World Development, Elsevier, vol. 43(C), pages 1-18.
  • Handle: RePEc:eee:wdevel:v:43:y:2013:i:c:p:1-18
    DOI: 10.1016/j.worlddev.2012.10.014
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Democracy depends on financial markets too
      by Bruno Duarte in EUnomics on 2018-09-03 18:02:28

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    Cited by:

    1. Madsen, Jakob B. & Raschky, Paul A. & Skali, Ahmed, 2015. "Does democracy drive income in the world, 1500–2000?," European Economic Review, Elsevier, vol. 78(C), pages 175-195.
    2. repec:bla:ecopol:v:29:y:2017:i:2:p:133-156 is not listed on IDEAS
    3. Jetter, Michael & Agudelo, Alejandra Montoya & Hassan, Andrés Ramírez, 2015. "The Effect of Democracy on Corruption: Income is Key," World Development, Elsevier, vol. 74(C), pages 286-304.
    4. Berliner, Daniel & Greenleaf, Anne & Lake, Milli & Noveck, Jennifer, 2015. "Building Capacity, Building Rights? State Capacity and Labor Rights in Developing Countries," World Development, Elsevier, vol. 72(C), pages 127-139.
    5. Salahodjaev, Raufhon, 2015. "Democracy and economic growth: the role of intelligence in cross-country regressions," MPRA Paper 65716, University Library of Munich, Germany, revised 26 Apr 2015.
    6. King, Alan & Ramlogan-Dobson, Carlyn, 2015. "Is Africa Actually Developing?," World Development, Elsevier, vol. 66(C), pages 598-613.
    7. repec:eee:wdevel:v:111:y:2018:i:c:p:27-40 is not listed on IDEAS
    8. María Franco Chuaire & Carlos Scartascini & Mariano Tommasi, 2017. "State capacity and the quality of policies. Revisiting the relationship between openness and government size," Economics and Politics, Wiley Blackwell, vol. 29(2), pages 133-156, July.

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