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Democracy and Economic Growth: A Meta-Analysis

Authors


  • We would like to thank the Editor of this journal, four anonymous referees, Ross Burkhart, Fatma Deniz, Charles Kurzman, David Lake, Martin Paldam, Adam Przeworski, Gordon Tullock, and the participants of the 2007 Public Choice Society meetings for their invaluable input.

Hristos Doucouliagos is professor of economics, Deakin University, 221 Burwood Highway, Burwood, VIC 3125, Australia (douc@deakin.edu.au). Mehmet Ali Ulubaşoğlu is professor of economics, Deakin University, 221 Burwood Highway, Burwood, VIC 3125, Australia (maulubas@deakin.edu.au).

Abstract

Despite a sizeable theoretical and empirical literature, no firm conclusions have been drawn regarding the impact of political democracy on economic growth. This article challenges the consensus of an inconclusive relationship through a quantitative assessment of the democracy-growth literature. It applies meta-regression analysis to the population of 483 estimates derived from 84 studies on democracy and growth. Using traditional meta-analysis estimators, the bootstrap, and Fixed and Random Effects meta-regression models, it derives several robust conclusions. Taking all the available published evidence together, it concludes that democracy does not have a direct impact on economic growth. However, democracy has robust, significant, and positive indirect effects through higher human capital, lower inflation, lower political instability, and higher levels of economic freedom. Democracies may also be associated with larger governments and less free international trade. There also appear to be country- and region-specific democracy-growth effects. Overall, democracy's net effect on the economy does not seem to be detrimental.

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