Monday, June 18, 2007

A new Consensus on Democracy and Growth??

For all democracy's seductive charms, most empirical work in economics concludes that the partial correlation between democracy and economic growth is if anything, negative (See Barro (1996 Journal of Economic Growth) and also Wacziarg).

However, three new papers are finding different results.

(1) two dudes named Kevin Grier & Michael Munger show that when one expands the sample of countries to include more long term non-democracies than are in the Penn World Tables, and when one accounts for the effects of regime length on growth, democracies enjoy a substantial growth advantage over non-democracies.

(2) Philippe Aghion, Alberto Alesina, and Francesco Trebbi argue that democracy affects economies in a heterogeneous fashion, specifically improving performance in "advanced" sectors.

(3) Torsten Persson and Guido Tabellini study regime transitions and find large growth penalties for exits from democracy.

So maybe there is one less reason to hate democracy!

2 comments:

Ali said...

You missed out an S in the headline.

123 123 said...

Cool blog as for me. I'd like to read something more about this matter. Thanx for posting this information.
Joan Stepsen
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