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Democracy and Development: The Devil in the Details

Torsten Persson () and Guido Tabellini

No 11993, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Does democracy promote economic development? We review recent attempts to address this question, which exploit the within-country variation associated with historical transitions in and out of democracy. The answer is positive, but depends - in a subtle way - on the details of democratic reforms. First, democratizations and economic liberalizations in isolation each induce growth accelerations, but countries liberalizing their economy before extending political rights do better than those carrying out the opposite sequence. Second, different forms of democratic government and different electoral systems lead to different fiscal trade policies: this might explain why new presidential democracies grow faster than new parliamentary democracies. Third, it is important to distinguish between expected and actual political reforms: expectations of regime change have an independent effect on growth, and taking expectations into account helps identify a stronger growth effect of democracy.

JEL-codes: E0 O1 P0 (search for similar items in EconPapers)
Date: 2006-02
New Economics Papers: this item is included in nep-mac
Note: EFG POL
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Citations: View citations in EconPapers (245)

Published as Persson, Torsten and Guido Tabellini. "Democracy and development: The devil in the details." American Economic Review 96 (2006): 319-324.

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Working Paper: Democracy and Development: The Devil in the Details (2006) Downloads
Working Paper: Democracy and Development: The Devil in the Details (2006) Downloads
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