Reanalysing the link between democracy and economic development

Lars Pelke
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Lars Pelke: Friedrich-Alexander Universität Erlangen-Nürnberg, Germany

International Area Studies Review, 2023, vol. 26, issue 4, 361-383

Abstract: This article systematically reanalyses the long-run effects of democracy on economic prosperity by using new Varieties of Democracy and gross domestic product (GDP) per capita data for a panel data set between 1789 and 2019. Adopting (a) dynamic panel strategies controlling for country and year-fixed effects and (b) newly introduced matching methods for time-series cross-sectional data, the findings clearly indicate that democracy substantively increases economic development. My reanalysis of Acemoglu et al.'s seminal study indicates that in the long-run democracy has a positive average effect on GDP per capita of around 17% for the period between 1789 and 2019. Overall, the findings strengthen the existing literature by using a large sample of countries in the entire 19th and 20th centuries and measuring democracy and liberalization episodes in a more nuanced and rigorous fashion.

Keywords: Democracy; economic development; growth; difference-in-differences; dynamic panel data models; replication (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sae:intare:v:26:y:2023:i:4:p:361-383

DOI: 10.1177/22338659231194945

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