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Should Market Liberalization precede Democracy ? Causal Relations between Political Preferences and Development

  • Grosjean, Pauline
  • Senik, Claudia

This paper is dedicated to the relation between market development and democracy. We distinguish contexts and preferences and ask whether it is true that the demand for democracy only emerges after a certain degree of market development is reached, and whether, conversely, democratization is likely to be an obstacle to the acceptation of market liberalization. Our study hinges on a new survey rich in attitudinal variables: the Life in Transition Survey (LITS) conducted in 2006 by the European Bank for Reconstruction and Development and the World Bank, in 28 post-Transition countries. Our identification strategy consists in relying on the specific situation of frontier-zones. We find that democracy enhances the support for market development whereas the reverse is not true. Hence, the relativist argument according to which the preference for democracy is an endogenous by-product of market development is not supported by our data.

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Paper provided by CEPREMAP in its series CEPREMAP Working Papers (Docweb) with number 0704.

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Length: 67 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:cpm:docweb:0704
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  1. Torsten Persson & Guido Tabellini, 2007. "The Growth Effect of Democracy: Is it Heterogenous and how can it be Estimated?," CESifo Working Paper Series 2016, CESifo Group Munich.
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  5. Daron Acemoglu & Simon Johnson & James Robinson & Pierre Yared, 2005. "Income and Democracy," NBER Working Papers 11205, National Bureau of Economic Research, Inc.
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  8. Fernández, Raquel & Fogli, Alessandra, 2005. "Culture: An Empirical Investigation of Beliefs, Work and Fertility," CEPR Discussion Papers 5089, C.E.P.R. Discussion Papers.
  9. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 222-79, April.
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  13. Gerard Roland & Thierry Verdier, 1999. "Law Enforcement and Transition," William Davidson Institute Working Papers Series 262, William Davidson Institute at the University of Michigan.
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  15. Daron Acemoglu & Simon Johnson & James A. Robinson & Pierre Yared, 2005. "From Education to Democracy?," American Economic Review, American Economic Association, vol. 95(2), pages 44-49, May.
  16. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
  17. Lutkepohl, Helmut, 1982. "Non-causality due to omitted variables," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 367-378, August.
  18. John F. Helliwell, 1992. "Empirical Linkages Between Democracy and Economic Growth," NBER Working Papers 4066, National Bureau of Economic Research, Inc.
  19. Djankov, Simeon & Freund, Caroline, 2000. "Disintegration," CEPR Discussion Papers 2545, C.E.P.R. Discussion Papers.
  20. Jenny A. Minier, 2001. "Is Democracy a Normal Good? Evidence from Democratic Movements," Southern Economic Journal, Southern Economic Association, vol. 67(4), pages 996-1009, April.
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