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Political freedom, economic freedom, and income convergence: Do stages of economic development matter?

Abstract

In the literature, theory and empirical evidence on the nexus of political freedom, economic freedom, and economic growth are mixed. In this paper, we test the hypothesis that the effect of political freedom on promoting economic growth is realized and detectable at later stages of social and economic development. Using panel data for a sample of 104 countries between 1970 and 2003, we find strong support for our hypothesis. While economic freedom has greater effects on income convergence in the OECD countries, political freedom clearly promotes the convergence among those OECD countries.

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Correspondence to Zhenhui Xu.

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Xu, Z., Li, H. Political freedom, economic freedom, and income convergence: Do stages of economic development matter?. Public Choice 135, 183–205 (2008). https://doi.org/10.1007/s11127-007-9253-y

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  • DOI: https://doi.org/10.1007/s11127-007-9253-y

Keywords

  • Income convergence
  • Economic freedom
  • Political freedom
  • Stages of development
  • OECD countries

JEL

  • C12
  • C23
  • O53
  • O57