IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/65716.html

Democracy and economic growth: the role of intelligence in cross-country regressions

Author

Listed:
  • Salahodjaev, Raufhon

Abstract

Empirical literature has long conjectured that institutional arrangements, proxied by democracy, social capital and intelligence, are relevant determinants in cross-country differences in economic performance. Related literature, however, predominantly documents that democracy has either a negative or not significant impact on economic growth, while intelligence is assumed to have strong and direct effect on economic performance. We propose that that the effect of democratization is mediated by the degree of the approval to such policies, and that intelligence may alleviate or diminish the negative effect of weak institutions on economic growth. We empirically, investigate the interactive effect of democracy and intelligence on economic growth, using data from 93 nations, over the period 1970-2013. The results show that the relationship link between democracy and the real GDP growth varies with a nation’s level of cognitive abilities. The results remain robust to various estimation techniques, control variables and time periods.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:65716
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/65716/1/MPRA_paper_65716.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Feng, Yi, 1997. "Democracy, Political Stability and Economic Growth," British Journal of Political Science, Cambridge University Press, vol. 27(3), pages 391-418, July.
    2. Ben S. Bernanke & Julio J. Rotemberg (ed.), 1997. "NBER Macroeconomics Annual 1997," MIT Press Books, The MIT Press, edition 1, volume 1, number 026252242x, December.
    3. Salahodjaev, Raufhon, 2015. "Intelligence and Shadow Economy: a Cross-Country Empirical Assessment," MPRA Paper 61976, University Library of Munich, Germany.
    4. A.F. Darrat & Y.K. Al-Yousif, 1999. "On the Long-Run Relationship between Population and Economic Growth: Some Time Series Evidence for Developing Countries," Eastern Economic Journal, Eastern Economic Association, vol. 25(3), pages 301-313, Summer.
    5. Cameron, David R., 1978. "The Expansion of the Public Economy: A Comparative Analysis," American Political Science Review, Cambridge University Press, vol. 72(4), pages 1243-1261, December.
    6. Dick, G William, 1974. "Authoritarian versus Nonauthoritarian Approaches to Economic Development," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 817-827, July/Aug..
    7. Masters, William A & McMillan, Margaret S, 2001. "Climate and Scale in Economic Growth," Journal of Economic Growth, Springer, vol. 6(3), pages 167-186, September.
    8. Michael Faye & John McArthur & Jeffrey Sachs & Thomas Snow, 2004. "The Challenges Facing Landlocked Developing Countries," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 5(1), pages 31-68.
    9. Isaac Kalonda-Kanyama & Oasis Kodila-Tedika, 2012. "Quality of Institutions : Does Intelligence Matter?," WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS 201206, University of Kansas, Department of Economics, revised Apr 2012.
    10. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    11. Potrafke, Niklas, 2012. "Intelligence and corruption," Economics Letters, Elsevier, vol. 114(1), pages 109-112.
    12. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March.
    13. Dani Rodrik, 1998. "Why Do More Open Economies Have Bigger Governments?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 997-1032, October.
    14. Dawid Piątek & Katarzyna Szarzec & Michał Pilc, 2013. "Economic freedom, democracy and economic growth: a causal investigation in transition countries," Post-Communist Economies, Taylor & Francis Journals, vol. 25(3), pages 267-288, September.
    15. 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.
    16. Vishal Jaunky, 2013. "Democracy and economic growth in Sub-Saharan Africa: a panel data approach," Empirical Economics, Springer, vol. 45(2), pages 987-1008, October.
    17. Edward L. Glaeser & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2004. "Do Institutions Cause Growth?," Journal of Economic Growth, Springer, vol. 9(3), pages 271-303, September.
    18. Milligan, Kevin & Moretti, Enrico & Oreopoulos, Philip, 2004. "Does education improve citizenship? Evidence from the United States and the United Kingdom," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1667-1695, August.
    19. Helliwell, John F., 1994. "Empirical Linkages Between Democracy and Economic Growth," British Journal of Political Science, Cambridge University Press, vol. 24(2), pages 225-248, April.
    20. Dani Rodrik & Romain Wacziarg, 2005. "Do Democratic Transitions Produce Bad Economic Outcomes?," American Economic Review, American Economic Association, vol. 95(2), pages 50-55, May.
    21. Matthew A. Baum & David A. Lake, 2003. "The Political Economy of Growth: Democracy and Human Capital," American Journal of Political Science, John Wiley & Sons, vol. 47(2), pages 333-347, April.
    22. Asli Demeirgüç-Kunt & Ross Levine (ed.), 0. "Finance and Growth," Books, Edward Elgar Publishing, number 17119.
    23. Torsten Persson, 2002. "Do Political Institutions Shape Economic Policy?," Econometrica, Econometric Society, vol. 70(3), pages 883-905, May.
    24. repec:bla:kyklos:v:55:y:2002:i:3:p:361-80 is not listed on IDEAS
    25. Beck, Thorsten & Levine, Ross & Loayza, Norman, 2000. "Finance and the sources of growth," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 261-300.
    26. Knutsen, Carl Henrik, 2013. "Democracy, State Capacity, and Economic Growth," World Development, Elsevier, vol. 43(C), pages 1-18.
    27. repec:cup:apsrev:v:53:y:1959:i:01:p:69-105_00 is not listed on IDEAS
    28. Plumper, Thomas & Martin, Christian W, 2003. "Democracy, Government Spending, and Economic Growth: A Political-Economic Explanation of the Barro-Effect," Public Choice, Springer, vol. 117(1-2), pages 27-50, October.
    29. Easterly, William & Levine, Ross, 2003. "Tropics, germs, and crops: how endowments influence economic development," Journal of Monetary Economics, Elsevier, vol. 50(1), pages 3-39, January.
    30. Alexander Libman, 2012. "Democracy, size of bureaucracy, and economic growth: evidence from Russian regions," Empirical Economics, Springer, vol. 43(3), pages 1321-1352, December.
    31. Acemoglu, Daron & Johnson, Simon & Robinson, James A., 2005. "Institutions as a Fundamental Cause of Long-Run Growth," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 6, pages 385-472, Elsevier.
    Full references (including those not matched with items on IDEAS)

    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. John A Doces, 2020. "Democracy, consumption, and growth in sub-Saharan Africa," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 23(1), pages 28-48, March.
    2. Helena Helfer, 2017. "Prosperity-Enhancing Institutions: Towards a Comprehensive Composite Index," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(3), pages 805-845, December.
    3. Beck, T.H.L., 2010. "Legal Institutions and Economic Development," Other publications TiSEM 8aa07b48-ce55-4cf6-8754-7, Tilburg University, School of Economics and Management.
    4. Zuazu, Izaskun, 2019. "The growth effect of democracy and technology: An industry disaggregated approach," European Journal of Political Economy, Elsevier, vol. 56(C), pages 115-131.
    5. Eberhardt, Markus, 2022. "Democracy, growth, heterogeneity, and robustness," European Economic Review, Elsevier, vol. 147(C).
    6. Derek Headey, 2008. "The Principal Components of Growth in the Less Developed Countries," Kyklos, Wiley Blackwell, vol. 61(4), pages 568-598, November.
    7. Salahodjaev, Raufhon, 2016. "Intelligence and deforestation: International data," Forest Policy and Economics, Elsevier, vol. 63(C), pages 20-27.
    8. Saima Nawaz & Idrees Khawaja, 2020. "The Impact of Political Regime and Institutions on Government Size in Middle-Income Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 59(2), pages 199-220.
    9. Capolupo, Rosa, 2009. "The New Growth Theories and Their Empirics after Twenty Years," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy, vol. 3, pages 1-72.
    10. 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.
    11. Fagerberg, Jan & Srholec, Martin & Knell, Mark, 2007. "The Competitiveness of Nations: Why Some Countries Prosper While Others Fall Behind," World Development, Elsevier, vol. 35(10), pages 1595-1620, October.
    12. Fogel, Kathy & Morck, Randall & Yeung, Bernard, 2008. "Big business stability and economic growth: Is what's good for General Motors good for America?," Journal of Financial Economics, Elsevier, vol. 89(1), pages 83-108, July.
    13. Ezcurra, Roberto & Zuazu, Izaskun, 2019. "Political equality and quality of government," MPRA Paper 96476, University Library of Munich, Germany.
    14. Santiago López-Cariboni & Xun Cao, 2019. "When do authoritarian rulers educate: Trade competition and human capital investment in Non-Democracies," The Review of International Organizations, Springer, vol. 14(3), pages 367-405, September.
    15. Gasmi, Farid & Recuero Virto, Laura & Couvet, Denis, 2023. "An empirical analysis of economic growth in countries exposed to coastal risks: Implications for their ecosystems," Economic Systems, Elsevier, vol. 47(4).
    16. Elias Papaioannou & Gregorios Siourounis, 2008. "Democratisation and Growth," Economic Journal, Royal Economic Society, vol. 118(532), pages 1520-1551, October.
    17. Wafa Ghardallou, 2022. "Financial System Development and Democracy: a Panel Smooth Transition Regression Approach for Developing Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(2), pages 1714-1735, June.
    18. Kodila-Tedika, Oasis & Tcheta-Bampa, Albert, 2014. "Cold War and Institutional Quality: Some Empirical Evidence," MPRA Paper 53965, University Library of Munich, Germany.
    19. Prathibha Joshi & Kris Beck, 2021. "Economic Growth and the Rise of Democracy: A Granger Causality Analysis," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(4), pages 389-414.
    20. Harashima, Taiji, 2009. "A Theory of Total Factor Productivity and the Convergence Hypothesis: Workers’ Innovations as an Essential Element," MPRA Paper 15508, University Library of Munich, Germany.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    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:pra:mprapa:65716. 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.