Regime Change, Democracy, and Growth

Caroline Freund () and Melise Jaud ()

No WP14-1, Working Paper Series from Peterson Institute for International Economics

Abstract: The empirical literature on the relationship between democracy and growth has yielded conflicting results. Cross-country studies have failed to identify a significant impact of democracy on growth, while within-country studies have found a strong positive effect of the transition to democracy on growth. We reconcile the conflicting evidence by showing that the positive effect of democratic transitions results from regime change as opposed to democratization. We identify over 100 transitions in the last half-century with various outcomes: to and from democracy, some partial, and some failed. The variety of experiences allows us to compare the growth outcome of democratic transitions with that of other transitions rather than with a no-transition counterfactual. Conditioning on regime change filters out selection effects and shows that transition to democracy yields no growth dividend compared to other types of regime change. We also show that countries that democratize slowly do not gain from regime change. These results suggest that the growth dividend from political transition results from swift regime change rather than from democratization.

Keywords: political transition; autocracy; event study (search for similar items in EconPapers)
JEL-codes: N40 O43 (search for similar items in EconPapers)
Date: 2014-04
New Economics Papers: this item is included in nep-dev, nep-fdg, nep-gro and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: Regime Change, Democracy and Growth (2013)
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