IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp15598.html

The Political U: New Evidence on Democracy and Income

Author

Listed:
  • Campos, Nauro F.

    (University College London)

  • Coricelli, Fabrizio

    (Paris School of Economics)

  • Frigerio, Marco

    (University of Siena)

Abstract

This paper throws new light on the relationship between income and democracy. Using data for 162 countries over 1960-2018, we show that the causal relationship between political and economic development is U- shaped: "intermediate" political regimes significantly lead to inferior economic performance vis-à-vis both "democracies" and "autocracies." Our results suggest "intermediate" regimes decrease long run GDP per capita by about 20 percent. These effects are mainly driven by political instability, while other potential mechanisms, such as education, investment and inequality, lack comparable empirical support. These findings are robust to, among others, using night-lights instead of GDP, different democracy measures and estimators.

Suggested Citation

  • Campos, Nauro F. & Coricelli, Fabrizio & Frigerio, Marco, 2022. "The Political U: New Evidence on Democracy and Income," IZA Discussion Papers 15598, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp15598
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp15598.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 1999. "The Quality of Government," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 222-279, April.
    2. Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 47-100.
    3. Fearon, James D, 2003. "Ethnic and Cultural Diversity by Country," Journal of Economic Growth, Springer, vol. 8(2), pages 195-222, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiekuan Zhang & Yan Zhang, 2023. "Examining the effects of economic growth pressure on green total factor productivity: evidence from China," Economic Change and Restructuring, Springer, vol. 56(6), pages 4309-4337, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Klaus Desmet & Ignacio Ortuño-Ortín & Romain Wacziarg, 2009. "The political economy of ethnolinguistic cleavages," Working Papers 2009-17, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    2. Gerring, John & Thacker, Strom C. & Lu, Yuan & Huang, Wei, 2015. "Does Diversity Impair Human Development? A Multi-Level Test of the Diversity Debit Hypothesis," World Development, Elsevier, vol. 66(C), pages 166-188.
    3. Beugelsdijk, Sjoerd & Slangen, Arjen & Maseland, Robbert & Onrust, Marjolijn, 2014. "The impact of home–host cultural distance on foreign affiliate sales: The moderating role of cultural variation within host countries," Journal of Business Research, Elsevier, vol. 67(8), pages 1638-1646.
    4. Robert P. Inman, 2008. "Federalism's Values and the Value of Federalism," NBER Working Papers 13735, National Bureau of Economic Research, Inc.
    5. Victor Ginsburgh & Shlomo Weber, 2020. "The Economics of Language," Journal of Economic Literature, American Economic Association, vol. 58(2), pages 348-404, June.
    6. Alberto Alesina & Eliana La Ferrara, 2005. "Ethnic Diversity and Economic Performance," Journal of Economic Literature, American Economic Association, vol. 43(3), pages 762-800, September.
    7. De Luca, Giacomo & Hodler, Roland & Raschky, Paul A. & Valsecchi, Michele, 2018. "Ethnic favoritism: An axiom of politics?," Journal of Development Economics, Elsevier, vol. 132(C), pages 115-129.
    8. Victor Ginsburgh & Shlomo Weber, 2016. "Linguistic Diversity, Standardization, and Disenfranchisement: Measurement and Consequences," ULB Institutional Repository 2013/277407, ULB -- Universite Libre de Bruxelles.
    9. Mª Ángeles Caraballo & Eva Mª Buitrago, 2019. "Ethnolinguistic Diversity and Education. A Successful Pairing," Sustainability, MDPI, vol. 11(23), pages 1-18, November.
    10. Mariko Nakagawa & Shonosuke Sugasawa, 2022. "Linguistic distance and economic development: A cross‐country analysis," Review of Development Economics, Wiley Blackwell, vol. 26(2), pages 793-834, May.
    11. P. Dorian Owen & R. Quentin Grafton & Tom Kompas, 2004. "Productivity, Factor Accumulation and Social Networks: Theory and Evidence," Econometric Society 2004 Australasian Meetings 224, Econometric Society.
    12. José Garcia Montalvo & Marta Reynal-Querol, 2004. "Ethnic polarization, potential conflict and civil wars," Economics Working Papers 770, Department of Economics and Business, Universitat Pompeu Fabra, revised Mar 2005.
    13. Sundar Ponnusamy & Mohammad Abbas Hakeem, 2024. "Ethnic inequality and public health," Health Economics, John Wiley & Sons, Ltd., vol. 33(1), pages 41-58, January.
    14. Geoffrey M. Hodgson, 2006. "Institutions, Recessions and Recovery in the Transitional Economies," Journal of Economic Issues, Taylor & Francis Journals, vol. 40(4), pages 875-894, December.
    15. Pierre PECHER, 2013. "Ethnic conflict, power dynamics and growth," LIDAM Discussion Papers IRES 2014008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    16. Sefa Awaworyi Churchill, 2019. "Firm financial performance in Sub-Saharan Africa: the role of ethnic diversity," Empirical Economics, Springer, vol. 57(3), pages 957-970, September.
    17. Eric M. Uslaner, 2006. "Does Diversity Drive Down Trust?," Working Papers 2006.69, Fondazione Eni Enrico Mattei.
    18. Ahlerup, Pelle & Hansson, Gustav, 2011. "Nationalism and government effectiveness," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 431-451, September.
    19. Antonis Adam & Manthos Delis & Pantelis Kammas, 2014. "Fiscal decentralization and public sector efficiency: evidence from OECD countries," Economics of Governance, Springer, vol. 15(1), pages 17-49, February.
    20. Sezer Yasar & Ceyhun Elgin, 2024. "Democracy and fiscal-policy response to COVID-19," Public Choice, Springer, vol. 198(1), pages 25-45, January.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F15 - International Economics - - Trade - - - Economic Integration
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp15598. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Fallak (email available below). General contact details of provider: https://edirc.repec.org/data/izaaalu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.