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Is Democracy Good for Growth? | Development at Political Transition Time Matters

Author

Listed:
  • Sima, Di

    (Nanjing Audit University)

  • Huang, Fali

    (Singapore Management University)

Abstract

Is democracy a better political regime for economic prosperity than autocracy? This paper shows that the answer depends on the initial economic development level during the democratic transition when the foundation of institutions was laid. Democracy fa-cilitates growth only in countries that already have adequate development at transition time. These countries are more likely to create and sustain growth-enhancing insti-tutions than others. Without appropriate development, democracy does not improve growth; this applies to about 40% of the third-wave democratized countries. These results are based on a sample of 153 countries in 1960-2010 and robust to various spec-ifications and endogeneity issues.

Suggested Citation

  • Sima, Di & Huang, Fali, 2022. "Is Democracy Good for Growth? | Development at Political Transition Time Matters," Economics and Statistics Working Papers 2-2023, Singapore Management University, School of Economics.
    • Handle: RePEc:ris:smuesw:2023_002
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    More about this item

    Keywords

    Democracy; Growth; Economic Development; Institutions; Critical Junc-ture; Democratization; Modernization; Human Capital.;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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