The Democratic Transition. A study of the causality between income and the Gastil democracy index
Erich Gundlach () and
Economics Working Papers from Department of Economics and Business Economics, Aarhus University
The paper considers the transformation of the political system as countries pass through the Grand Transition from a poor developing country to a wealthy developed country. In the process most countries change from an authoritarian to a democratic political system. This is shown by using the Gastil democracy index from Freedom House. First, the basic pattern of correlations reveals that a good deal of the short- to medium-run causality appears to be from democracy to income. Then a set of extreme biogeographic instruments is used to demonstrate that the long-run causality is from income to democracy. The long-run result survives various robustness tests. We show how the Grand Transition view resolves the seeming contradiction between the long-run and the short- to medium-run effects.
Keywords: Paths of development; democracy; biogeography (search for similar items in EconPapers)
JEL-codes: B25 O1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-dev and nep-pol
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Persistent link: http://EconPapers.repec.org/RePEc:aah:aarhec:2008-15
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