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Democracy and growth: An alternative empirical approach

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  • Jian-Guang Shen

    (Bank of Finland, Institute for Economies in Transition, BOFIT)

Abstract

This paper proposes a “before-and-after” approach to empirical examination of the relationship between democracy and growth. Rather than the commonly used cross-country regression method, this paper compares the economic performances of forty countries before and after they became democracies or semi-democracies sometime within the last forty years. The empirical evidence indicates that an improvement in growth performance typically follows the transformation to democracy. Moreover, growth under democracy appears to be more stable than under authoritarian regimes. Interestingly, wealthy countries often experience declines in growth after a democratic transformation, while very poor nations typically experience accelerations in growth. Growth change appears to be negatively related to the initial savings ratio and positively related to the export ratio to GDP. Partial correlation between growth change and primary school or secondary school enrollments and the ratio of government expenditure to GDP is not identified.

Suggested Citation

  • Jian-Guang Shen, 2002. "Democracy and growth: An alternative empirical approach," Development and Comp Systems 0212002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpdc:0212002
    Note: Type of Document - pdf; prepared on IBM PC ; pages: 32 ; figures: included
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    References listed on IDEAS

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    Cited by:

    1. World Bank, 2007. "Angola : Oil, Broad-Based Growth, and Equity," World Bank Publications, The World Bank, number 6759, July.
    2. Branko Milanovic, 2005. "The Modern World: The effect of democracy, colonialism and war on economic growth 1820-2000," Development and Comp Systems 0509002, University Library of Munich, Germany.
    3. Muhammad Ashraf & Nawaz Ahmad & Sheema Haider3, 2016. "Antecedents Of Turnover Intentions: A Study Of Karachi Business Schools," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 12(2), pages 12-10.
    4. Ana Margarida Oliveira Brochado & Francisco Vitorino Martins, 2005. "Democracy and Economic Development: a Fuzzy Classification Approach," FEP Working Papers 180, Universidade do Porto, Faculdade de Economia do Porto.
    5. Shakeel Qadir & Muhammad Tariq & Muhammad Waqas, 2016. "Democracy Or Military Dictatorship: A Choice Of Governance For The Economic Growth Of Pakistan," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 12(1), pages 39-51.

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    More about this item

    Keywords

    Democracy; economic growth; O40; O57;
    All these keywords.

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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