The Relationship between Economic Growth and Democracy: Alternative Representations of Technological Change

Nam-Seok Kim and Almas Heshmati ()

No 85, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: This study investigates the relationship between economic growth and democracy by estimating a nation’s production function specified as static and dynamic models using panel data. In estimating the production function, it applies a single time trend, multiple time trends and the general index formulations to the translog production function to capture time effects representing technological changes of unknown forms. In addition to the unknown forms, implementing the technology shifters model enabled this study to find possible known channels between economic growth and democracy. Empirical results based on a panel data of 144 countries observed for 1980-2014 show that democracy had a robust positive impact on economic growth. Credit guarantee is one of the most significant positive links between economic growth and democracy. The marginal effects of credit guarantee and foreign direct investment inflows are stronger in democratic countries than they are in non-democratic ones. In order to check the robustness of these results, a dynamic model constructed with a flexible adjustment speed and a target level of GDP is also tested. The results of this dynamic model also support the positive impacts of democracy on economic growth.

Keywords: Economic growth; democracy; production function; single time trend; multiple time trends; general index; technology shifters; flexible adjustment speed; target level of GDP (search for similar items in EconPapers)
JEL-codes: D24 O43 O47 P16 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-eff and nep-gro
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/162733/1/GLO_DP_0085.pdf (application/pdf)

Related works:
Working Paper: The Relationship between Economic Growth and Democracy: Alternative Representations of Technological Change (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:85

Access Statistics for this paper

More papers in GLO Discussion Paper Series from Global Labor Organization (GLO) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().