Does democracy drive income in the world, 1500–2000?

Jakob Madsen, Paul Raschky and Ahmed Skali

European Economic Review, 2015, vol. 78, issue C, 175-195

Abstract: Using data for political regimes, income and human capital for a sample of 141 countries over the periods 1820–2000 and 1500–2000, this research examines the income and growth effects of democracy when human capital, among other key variables, is controlled for. Linguistic distance-weighted foreign democracy is used as an instrument for domestic democracy. Democracy is found to be a significant determinant of income and growth and the result is robust to various estimation methods and covariates. We find that a one-standard deviation increase in democracy is associated with a 44–98% increase in per capita income.

Keywords: Democracy; Economic growth; Human capital; Long-term economic development (search for similar items in EconPapers)
JEL-codes: D72 H1 P16 P48 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (49)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:78:y:2015:i:c:p:175-195

DOI: 10.1016/j.euroecorev.2015.05.005

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