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Safeguarding Economic Growth Amid Democratic Backsliding: The Primacy of Institutions over Innovation

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  • Ran Ben Malka

    (Department of Economics, Sapir Academic College, D.N. Hof Ashkelon 79165, Israel)

  • Sharon Hadad

    (Department of Economics, Sapir Academic College, D.N. Hof Ashkelon 79165, Israel)

Abstract

This paper investigates how democracy influences economic growth through innovation and institutional quality. Using an augmented Solow growth model and panel-data mediation analysis across 123 countries (2011–2022), we quantify democracy’s impact on GDP per capita. Our results show that institutional quality accounts for 83.3% of democracy’s total effect on economic output, while innovation explains only 16.7%. This study contributes to the literature by distinguishing between institutional and innovation channels in the democracy–growth nexus and provides policy-relevant insights for promoting inclusive economic growth (SDG 8) and building resilient infrastructure and innovation (SDG 9).

Suggested Citation

  • Ran Ben Malka & Sharon Hadad, 2025. "Safeguarding Economic Growth Amid Democratic Backsliding: The Primacy of Institutions over Innovation," Economies, MDPI, vol. 13(8), pages 1-18, August.
    • Handle: RePEc:gam:jecomi:v:13:y:2025:i:8:p:237-:d:1725367
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