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Democracy and growth: Evidence from SVMDI indices

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  • Gründler, Klaus
  • Krieger, Tommy

Abstract

Evidence from a novel measure of democracy (SVMDI) based on Support Vector Machines highlights a robust positive relationship between democracy and economic growth. We argue that the ambiguity in recent studies can be traced back to the neglect of the information in the equation in levels and the lack of sufficient sensitivity of traditional democracy indicators. We further analyze the transmission channels through which democracy exerts its influence on growth, concluding that democratic countries have better educated populations, higher investment shares, lower fertility rates, but not necessarily higher levels of redistribution. The latter explains why we find only little indication of a nonlinear effect of democracy on growth.

Suggested Citation

  • Gründler, Klaus & Krieger, Tommy, 2015. "Democracy and growth: Evidence from SVMDI indices," Discussion Paper Series 131, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    • Handle: RePEc:zbw:wuewwb:131
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    References listed on IDEAS

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    6. Alessandro Lizzeri & Nicola Persico, 2004. "Why did the Elites Extend the Suffrage? Democracy and the Scope of Government, with an Application to Britain's "Age of Reform"," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 707-765.
    7. José Cheibub & Jennifer Gandhi & James Vreeland, 2010. "Democracy and dictatorship revisited," Public Choice, Springer, vol. 143(1), pages 67-101, April.
    8. Gründler, Klaus & Krieger, Tommy, 2015. "Using support vector machines for measuring democracy," Discussion Paper Series 130, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    9. Frederick Solt, 2009. "Standardizing the World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 90(2), pages 231-242, June.
    10. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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    Cited by:

    1. Brieger Stefan & Markwardt Gunther, 2020. "The Democracy–Economy-Nexus," Review of Economics, De Gruyter, vol. 71(2), pages 135-167, August.
    2. Lamia Arfaoui & Azza Ziadi & Sonia Manai, 2016. "The Relationship between Democracy and Economic Growth in Tunisia: An Application of Autoregressive Distributed Lag Model," International Journal of Social Science Research, Macrothink Institute, vol. 4(1), pages 137-150, March.
    3. Nguenda Anya, Saturnin Bertrand & Nzepang, Fabrice, 2022. "The role of the separation of democratic powers on structural transformation in Sub-Saharan Africa," Economic Systems, Elsevier, vol. 46(4).

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    More about this item

    Keywords

    Democracy; Economic Growth; Support Vector Machines;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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