Does democracy foster or hinder growth? Extreme-type political regimes in a large panel

Joao Jalles

Economics Bulletin, 2010, vol. 30, issue 2, 1359-1372

Abstract: Using a panel dataset of 86 countries from 1960-2005, this paper empirically assesses the effect of several democracy proxies (by means of the Polity IV database), together with a set of control variables, such as human capital and the initial level of GDP per capita, on the rate of economic growth. By means of pooled OLS regressions, fixed effects and TSLS estimation procedures our results support the long-run conditional convergence hypothesis and they show a positive and statistically significant effect of democracy and human capital on economic growth. Furthermore, these findings are robust to several sensitivity exercises, such as the consideration of different time spans and groupings (rich and poor countries). Our evaluation allows us to conclude that electoral democracy, by itself, increases GDP growth per capita while almost no support is found for the hypothesis that autocracy, by itself, increases it.

Keywords: endogeneity; autocracy; human capital; convergence; Polity-IV (search for similar items in EconPapers)
JEL-codes: O1 O4 (search for similar items in EconPapers)
Date: 2010-05-12
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Citations: View citations in EconPapers (3)

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