Do Democracies Grow Faster? Revisiting the Institutions and Economic Performance Debate

Jamus Lim and Jessica Henson Decker

MPRA Paper from University Library of Munich, Germany

Abstract: The recent empirical growth literature has proposed three underlying fundamental determinants of economic growth, namely, physical geography, economic integration, and institutional quality. This paper unpacks the final determinant into both political-economic institutions as well as the primarily political institution of democratic development. Using both cross-sectional and panel datasets, we show that, properly instrumented, there is no evidence that democracies grow faster or slower than non-democracies. This result is in contrast to much of the more recent literature, which tend to find a weakly positive relationship. Political economic institutions, however, remain positive and significant determinants of economic growth, which corroborates much of the empirical evidence in the existing literature.

Keywords: Economic growth; institutions; democracy (search for similar items in EconPapers)
JEL-codes: O17 O47 P51 (search for similar items in EconPapers)
Date: 2007-12
New Economics Papers: this item is included in nep-pol and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:6076

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