Abstract

We provide evidence that democracy has a positive effect on GDP per capita. Our dynamic panel strategy controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy. To reduce measurement error, we introduce a new indicator of democracy that consolidates previous measures. Our baseline results show that democratizations increase GDP per capita by about 20 percent in the long run. We find similar effects using a propensity score reweighting strategy as well as an instrumental-variables strategy using regional waves of democratization. The effects are similar across different levels of development and appear to be driven by greater investments in capital, schooling, and health.

Keywords

Per capitaDemocracyDemocratizationEconomicsGross domestic productDemographic economicsEconometricsInstrumental variableHuman capitalReal gross domestic productCapital (architecture)Development economicsMonetary economicsMacroeconomicsEconomic growthGeographyPoliticsMedicinePolitical scienceEnvironmental health

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Publication Info

Year
2018
Type
article
Volume
127
Issue
1
Pages
47-100
Citations
1310
Access
Closed

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Daron Acemoğlu, Suresh Naidu, Pascual Restrepo et al. (2018). Democracy Does Cause Growth. Journal of Political Economy , 127 (1) , 47-100. https://doi.org/10.1086/700936

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DOI
10.1086/700936