Is democracy good for growth? — Development at political transition time matters

Di Sima and Fali Huang

European Journal of Political Economy, 2023, vol. 78, issue C

Abstract: Is democracy a better political regime for economic prosperity than autocracy? This paper shows that the answer depends on the initial economic development level during the democratic transition when the foundation of institutions was laid. Democracy facilitates growth only in countries that already have adequate development at transition time. These countries are more likely to create and sustain growth-enhancing institutions than others. Without appropriate development, democracy does not improve growth; this applies to about 40% of the third-wave democratized countries. These results are based on a sample of 153 countries in 1960–2010 and robust to various specifications and endogeneity issues.

Keywords: Democracy; Growth; Economic development; Institutions; Critical juncture; Democratization; Modernization; Human capital (search for similar items in EconPapers)
JEL-codes: D73 E02 I25 O10 O43 P16 P48 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:78:y:2023:i:c:s0176268022001586

DOI: 10.1016/j.ejpoleco.2022.102355

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