Waylaid Dialectic

November 19, 2010

The Long Run Impacts of Democracy on Growth

Filed under: Governance — terence @ 10:48 am
Tags: ,

An interesting looking paper…

Democracy and Growth: A Historical Perspective

Gerring, John; Bond, Phillip J.; Barndt, William T.; Moreno, Carola.

World Politics, Volume 57, Number 3, April 2005, pp. 323-364 (Article)

The predominant finding of recent empirical work is that democracy has either a negative effect on growth or no overall effect. In this essay, we disagree. Existing work assumes that the causal effect of democracy on growth should be immediate. But if democracy matters to growth it is more reasonable to assume that this effect is registered over a period of years, rather than instantaneously. Indeed, many of the arguments for democracy as an engine of growth are more plausible when applied to established democracies than when applied to transitional democracies. If we do not take this into account we risk losing the main causal effect of democracy on growth. Therefore we choose to operationalize democracy as a “stock,” rather than a “level,” variable. That is, we measure democracy as the number of years a country has been democratic, in addition to the degree of democracy experienced at any given time. We use regression analysis of time-series cross-sectional data (all countries in the world, 1950-2000) to test the hypothesis that that democracy – understood as a stock variable – is good for economic growth. We find that democracy has a robust, positive impact on growth during this time period.

Gated version here. Possibly un-gated conference paper here.

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