Public Choice

, Volume 86, Issue 1–2, pp 175–198 | Cite as

New evidence on the relationship between democracy and economic growth

  • Jakob De Haan
  • Clemens L. J. Siermann


It is often maintained that democracy is a luxury which comes at a price in terms of subsequent slower increases in national living standards. However, various recent cross-section studies on economic growth have found evidence that lack of civil and political liberties is negatively correlated with economic growth. Using a new measure of democracy, which is based upon the number of years that a country can be regarded as a democracy, the robustness of this relationship is examined. Both direct and indirect effects of lack of democratic liberties are analysed. Our main conclusion is that the relationship between democracy and economic growth is not rubust.


Economic Growth Indirect Effect Public Finance Living Standard Slow Increase 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Alesina, A., Ozler, S., Roubin, N. and Swagel, P. (1992). Political instability and economic growth. NBER Working Paper, No. 4173.Google Scholar
  2. Alesina, A. and Perotti, R. (1994). The political economy of growth: A critical survey of the recent literature. The World Bank Economic Review 8: 351–371.Google Scholar
  3. Barro, R.J. (1989). A cross-country study of growth, saving, and government. NBER Working Paper, No. 2855.Google Scholar
  4. Barro, R.J. (1991). Economic growth in a cross section of countries. The Quarterly Journal of Economics 106: 407–443.Google Scholar
  5. Barro, R.J. (1994). Democracy and growth. NBER Working Paper, No. 4909.Google Scholar
  6. Barro, R.J. and Lee, J. (1993). Losers and winners in economic growth. NBER Working Paper, No. 4341.Google Scholar
  7. Baumol, W.J., Batey Blackman, S.A. and Wolff, E.J. (1989). Productivity and American leadership: The long view. Cambridge: MIT Press.Google Scholar
  8. Becker, G.S. (1983). A theory of competition among pressure groups for political influence. The Quarterly Journal of Economics 18: 371–400.Google Scholar
  9. Bhagwati, J. (1966). The economics of underdeveloped countries. New York: McGraw Hill.Google Scholar
  10. Brunetti, A. and Weder, B. (1995). Political sources of growth: A critical note on measurement. Public Choice 82: 125–134.Google Scholar
  11. Dasgupta, P. (1990). Well-being and the extent of its realisation in poor countries. The Economic Journal 100: 1–32.Google Scholar
  12. Dijkstra, T.K. (1995). Pyrrho's Lemma, or have it your way. Metrika 42: 119–125.Google Scholar
  13. Feder, G. (1982). On exports and economic growth. Journal of Development Economics 12: 59–73.Google Scholar
  14. Fischer, S. (1993). The role macroeconomic factors in economic growth. Journal of Monetary Economic 32: 485–512.Google Scholar
  15. Gasiorowski, M.J. (1993). The political regime change dataset. Baton Rouge: Louisiana State University.Google Scholar
  16. Gastil, R.D. (1990). The comparative survey of freedom: Experiences and suggestions. Studies in Comparative International Development 25: 25–50.Google Scholar
  17. Grier, K.B. and Tullock, G. (1989). An empirical analysis of cross-national economic growth, 1951–1980. Journal of Monetary Economics 24: 259–276.Google Scholar
  18. Haan, J. de and Siermann, C.L.J. (1995a). A sensitivity analysis of the impact of democracy on economic growth. Empirical Economics 20: 197–215.Google Scholar
  19. Haan, J. de and Sierman, C.L.J. (1995b). Luxury or stimulus? The impact of democracy on economic growth. Mimeo.Google Scholar
  20. Helliwell, J.F. (1992). Empirical linkages between democracy and economic growth. NBER Working Paper, No. 4066.Google Scholar
  21. Huntington, S.P. (1968). Political order in changing societies. New Haven: Yale University Press.Google Scholar
  22. Kormendi, R.C. and Meguire, P.G. (1985). Macroeconomic determinants of growth. Journal of Monetary Economics 16: 141–163.Google Scholar
  23. Landau, D. (1986). Government and economic growth in the less developed countries: An empirical study for 1960–1980. Economic Development and Cultural Change 35: 35–75.Google Scholar
  24. Leamer, E.E. (1983). Let's take the con out of econometrics. American Economic Review 73: 31–43.Google Scholar
  25. Levine, R. (1991). Economic growth. A review of the theoretical and empirical literature. World Bank Working papers, WPS 678.Google Scholar
  26. Levine, R. and Renelt, D. (1992). A sensitivity analysis of cross-country growth regressions. The American Economic Review 82: 942–963.Google Scholar
  27. Marsh, R.M. (1988). Sociological explanations of economic growth. Studies in Comparative International Research 23: 41–77.Google Scholar
  28. McColm, R.B. (1992). Freedom in the world: Political rights and civil liberties, 1991–1992. New York: Freedom House.Google Scholar
  29. Olson, M. (1993). Dictatorship, democracy, and development. American Political Science Review 87: 567–576.Google Scholar
  30. Page, J. (1994). The East Asian miracle: Four lessons for development policy. NBER Macroeconomics Annual 9: 219–269.Google Scholar
  31. Pastor, M.P. and Hilt, E. (1993). Private investment and democracy in Latin America. World Development 21: 489–507.Google Scholar
  32. Pastor, M.P. and Sung, J.H. (1995). Private investment and democracy in the developing world. Journal of Economic Issues 29: 223–243.Google Scholar
  33. Pourgerami, A. (1988). The political economy of development: A cross-national causality test of development-democracy-growth hypothesis. Public Choice 58: 123–141.Google Scholar
  34. Przeworski, A. and Limongi, F. (1993). Political regimes and economic growth. Journal of Economic Perspective 7: 51–69.Google Scholar
  35. Romer, P.M. (1989). What determines the rate of growth and technical change? World Bank Research Working paper, No. WPS 279.Google Scholar
  36. Scully, G.W. (1988). The institutional framework and economic development. Journal of Political Economy 96: 652–662.Google Scholar
  37. Sirowy, L. and Inkeles, A. (1990). The effects of democracy on economic growth and inequality: A review. Studies in Comparative International Development 25: 126–157.Google Scholar
  38. Sloan, J. and Tedin, K.L. (1987). The consequences of regime type for public-policy outputs. Comparative Political Studies 20: 98–124.Google Scholar
  39. Sörensen, G. (1993). Democracy and democratization: Processes, domestic and international consequences. Boulder, CO: Westview.Google Scholar
  40. Summers, R. and Heston, A. (1991). The Pen World Table (Mark 5): An expanded set of international comparisons, 1950–1988. The Quarterly Journal of Economics 106: 327–368.Google Scholar
  41. Vanssay, X. de and Spindler, Z.A. (1994). Freedom and growth: Do constitutions matter? Public Choice 78: 359–372.Google Scholar
  42. Weede, E. (1983). The impact of democracy on economic growth: Some evidence from cross-national analysis. Kyklos 36: 21–39.Google Scholar
  43. Weede, E. (1993). The impact of democracy or repressiveness on the quality of life, income distribution and economic growth rates. International Sociology 8: 177–195.Google Scholar
  44. White, H. (1980). A heteroskedasticy-consistent covariance matrix estimator and a direct test for heteroskedasticity. Econometrica 48: 817–838.Google Scholar
  45. Williamson, J. (1994). The political economy of policy reform. Washington, DC: Institute for International Economics.Google Scholar
  46. Wittman, D. (1989). Why democracies produce efficient results. Journal of Political Economy 97: 1395–1424.Google Scholar
  47. World Bank (1991). The world development report 1991. Oxford: Oxford University Press.Google Scholar

Copyright information

© Kluwer Academic Publishers 1996

Authors and Affiliations

  • Jakob De Haan
    • 1
  • Clemens L. J. Siermann
    • 1
  1. 1.Department of EconomicsUniversity of GroningenGroningen

Personalised recommendations