Does Democracy Impact Economic Growth? Exploring the Case of Bangladesh – A Cointegrated VAR Approach

Shouro Dasgupta, Debapriya Bhattacharya and Dwitiya Jawher Neethi

MPRA Paper from University Library of Munich, Germany

Abstract: The key socioeconomic indicators of Bangladesh have apparently experienced improvement since the advent of a new phase of democracy in 1991. This paper examines the impact of democracy on economic growth in Bangladesh using a cointegrated Vector Autoregressive model. Results suggest that democracy as practiced in Bangladesh does not seem to have a significantly positive impact on economic growth, and at the same time authoritarian regimes tend to have a significantly negative impact on economic growth. Inadequate democratic decision making practices, ineffective policy designs and weak policy making institutions are some of the likely causes behind this relationship. The situation is aggravated by the fact that the institutions do not positively alter the decision making behaviour even under democratically elected regimes.

Keywords: Democracy; Economic Growth. Cointegration; VAR; and Polity IV (search for similar items in EconPapers)
JEL-codes: C10 C12 C51 E13 O43 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-cdm, nep-gro, nep-mac and nep-pol
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:56621

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