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The Political Economy of Growth: A Review

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  • Hazama, Yasushi

Abstract

This cursory literature review discusses the direct and indirect effects of institutions, governance, and democracy on economic growth, and the following conclusions are drawn. First, institutions and governance have a positive effect on growth. Even reforms that are less than comprehensive can stimulate, though not sustain, growth. Second, democracy neither promotes nor hampers growth directly. It secures stability and resilience in growth. It also exerts impacts on sources of growth but its net effect remains inconclusive. There remains unanswered the question of why institutions and governance matter but not democracy does not. The difference may be partly due to negative effects on investment and labor supply as well as the low credibility of young or partial democracies.

Suggested Citation

  • Hazama, Yasushi, 2008. "The Political Economy of Growth: A Review," IDE Discussion Papers 141, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper141
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    Cited by:

    1. Colagrossi, Marco & Rossignoli, Domenico & Maggioni, Mario A., 2020. "Does democracy cause growth? A meta-analysis (of 2000 regressions)," European Journal of Political Economy, Elsevier, vol. 61(C).

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    More about this item

    Keywords

    Economic growth; Institutions; Governance; Democracy; Politics; 経済成長; 制度; ガバナンス; 民主主義; 政治;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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