Democracy fosters economic growth, study finds

ScienceDaily | 3/7/2019 | Staff
bluelilly (Posted by) Level 3
But a new study co-authored by an MIT economist shows that when it comes to growth, democracy significantly increases development. Indeed, countries switching to democratic rule experience a 20 percent increase in GDP over a 25-year period, compared to what would have happened had they remained authoritarian states, the researchers report.

"I don't find it surprising that it should be a big effect, because this is a big event, and nondemocracies, dictatorships, are messed up in many dimensions," says Daron Acemoglu, an MIT economist and co-author of the new paper about the study.

Acemoglu - Notes - Democracies - Investment - Health

Overall, Acemoglu notes, democracies employ broad-based investment, especially in health and human capital, which is lacking in authoritarian states.

"Many reforms that are growth-enhancing get rid of special favors that nondemocratic regimes have done for their cronies. Democracies are much more pro-reform," he says.

Paper - Democracy - Does - Cause - Growth

The paper, "Democracy Does Cause Growth," is published this month in the Journal of Political Economy. The co-authors are Acemoglu, who is the Elizabeth and James Killian Professor of Economics at MIT; Suresh Naidu, an associate professor of economics and international and public affairs at Columbia University; Pascual Restrepo, an assistant professor of economics at Boston University; and James Robinson, a political scientist and economist at the Harris School of Public Policy of the University of Chicago.

Study the "switchers"

Acemoglu - Robinson - Decades - Research - Interplay

Acemoglu and Robinson have worked together for nearly two decades on research involving the interplay of institutions, political systems, and economic growth. The current paper is one product of that research program.

To conduct the study, the researchers examined 184 countries in the period from 1960 to 2010. During that time, there were 122 democratizations of countries, as well as 71 cases in which countries moved from democracy to a nondemocratic type of government.

Study - Cases - Countries - Forms - Rule

The study focuses precisely on cases where countries have switched forms of rule. That's because, in part,...
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