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The Democratic Transition: Short-run and Long-run Causality between Income and the Gastil Index


  • Martin Paldam

    (School of Economics and Management, Aarhus University, Aarhus C)

  • Erich Gundlach

    (GIGA German Institute of Global and Area Studies and Hamburg University, Hamburg)


This article considers the transformation of the political system as countries pass through the Grand Transition from being a poor developing country to a wealthy developed country. In the process, most countries change from an authoritarian to a democratic political system, as measured by the Gastil index from Freedom House. The basic pattern of correlations reveals that a good deal of the short-to-medium-run causality appears to be from democracy to income. However, the long-run causality is from income to democracy, as shown by instrumenting income with a set of extreme measures of biogeography. The long-run result survives various robustness tests. The article explains how the Grand Transition view resolves the seeming contradiction between the long-run and the short-to-medium-run effects.Cet article examine la transformation du système politique des pays en cours de Grande Transition de l′état de pays pauvre en voie de développement à l’état de pays riche et développé. Lors de cette transition, la plupart des pays passent d′un régime autoritaire à un système politique démocratique, comme le montre l′indice Gastil de Freedom House. Le modèle de corrélation de base révèle que la causalité de court et moyen termes va en grande partie de la démocratie vers le revenu. Mais, ainsi qu′on le voit en instrumentant le revenu par un ensemble de mesures extrêmes de biogéographie, la causalité de long terme paraît aller du revenu vers la démocratie. Le résultat de long terme résiste aux divers tests de robustesse. Nous expliquons en quoi la notion de ‘Grande Transition’ permet de résoudre l′apparente contradiction entre les effets de long terme et les effets de court et moyen termes.

Suggested Citation

  • Martin Paldam & Erich Gundlach, 2012. "The Democratic Transition: Short-run and Long-run Causality between Income and the Gastil Index," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 24(1), pages 144-168, February.
  • Handle: RePEc:pal:eurjdr:v:24:y:2012:i:1:p:144-168

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    Cited by:

    1. Wadjamsse B. Djezou, 2014. "The Democracy and Economic Growth Nexus: Empirical Evidence from Côte d’Ivoire," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(2), pages 251-266, December.
    2. Fabrice Murtin & Romain Wacziarg, 2014. "The democratic transition," Journal of Economic Growth, Springer, vol. 19(2), pages 141-181, June.
    3. Hugo J. Faria & Hugo M. Montesinos-Yufa & Daniel R. Morales, 2014. "Should the Modernization Hypothesis Survive Acemoglu, Johnson, Robinson, and Yared? Some More Evidence," Econ Journal Watch, Econ Journal Watch, vol. 11(1), pages 17-36, January.
    4. Toke Aidt & Christian Bjørnskov & Peter Kurrild-Klitgaard & Gert Svendsen, 2013. "Public choice, political economy and development: an introduction to the life, times and themes of Martin Paldam," Public Choice, Springer, vol. 157(3), pages 357-365, December.

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