Democratization and Growth

Elias Papaioannou and Gregorios Siourounis

No 27, Working Papers from University of Peloponnese, Department of Economics

Abstract: This paper challenges cross-sectional findings that democracy has a negligible effect on growth. We employ a new dataset of political transitions during the Third Wave of Democratization and examine the within effect of democratization in countries that abandoned autocracy and consolidated representative institutions. The panel estimates imply that on average democratizations are associated with a one half increase in annual per capita growth. The dynamic analysis reveals that: while during the transition growth is slow, in the medium and long run it stabilizes at a higher level. This evidence favours development theories of democratic rule and Friedrich Hayek (1960)’s idea that the merits of democracy appear in the long run..

Keywords: event study; institutions; political economy; democracy; annual growth. (search for similar items in EconPapers)
Pages: 43 pages
Date: 2008
New Economics Papers: this item is included in nep-cdm, nep-dev, nep-pol and nep-soc
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Related works:
Journal Article: Democratisation and Growth (2008)
Journal Article: Democratisation and Growth (2008)
Working Paper: Democratization and Growth (2008)
Working Paper: DEMOCRATIZATION AND GROWTH (2007)
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