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Institutional interactions and economic growth: the joint effects of property rights, veto players and democratic capital

An Erratum to this article was published on 09 April 2014

“Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions. […] Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own. […] That is not a just government, nor is property secure under it, where the property which a man has in his personal safety and personal liberty, is violated by arbitrary seizures of one class of citizens for the service of the rest.”

James Madison (1792/1906: 101–103)

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Notes

  1. See, e.g., North and Thomas (1973), Weaver and Rockman (1993b), Kasper and Streit (1998), Borner and Paldam (1998), Scully (2001), Acemoglu et al. (2001), Rodrik et al. (2004), and de Haan (2007).

  2. Compare, e.g., Helliwell (1994), Barro (1996, 1997), Doucouliagos and Ulubasoglu (2008), and Gundlach and Paldam (2009).

  3. See, e.g., Torstensson (1994), Goldsmith (1995), Knack and Keefer (1995), Clague et al. (1996), Leblang (1996), Keefer and Knack (1997), Carlsson and Lundström (2002), O’Driscoll and Hoskins (2003), Claessens and Laeven (2003), Acemoglu and Johnson (2005), Berggren and Jordahl (2005), and Berggren et al. (2012), cf. Asoni (2008).

  4. On the nature of political transaction costs, see, e.g., Buchanan and Tullock (1962/2004) and Berggren and Karlson (2003).

  5. Exceptions are Melton (2013) and Justesen (2014). See also Kurrild-Klitgaard (2003), Justesen and Kurrild-Klitgaard (2007).

  6. See also Krehbiel (1996), who demonstrates that there are reasons to believe that the mere presence of institutional veto players, irrespective of their partisan leanings, will be able to provide “gridlock”.

  7. See Gerring et al. (2005), Gerring et al. (2012), Keefer (2007), Kapstein and Converse (2008), and Persson and Tabellini (2009).

  8. See Keefer (2007), Gerring et al. (2005), Gerring et al. (2012), and Persson and Tabellini (2009).

  9. LDCs are defined as all countries outside West Europe, North America, Australia, New Zealand, and Japan.

  10. Additional plots are available upon request.

  11. The coefficients of the constituent terms on the veto players variables in Table 1 show the effect of veto players when the value of the property rights variable is zero (Brambor et al. 2006), corresponding to a situation with weak property rights. In such cases, the coefficients indicate that institutional veto players have negative effects on economic growth.

  12. Note that Przeworski et al. (2000) and Cheibub et al. (2010) both code Botswana as a non-democracy because the same political party has held office since democratic elections were introduced there. This coding is controversial, since Botswana it mostly regarded as long-standing democracy (Robinson and Parsons 2006). However, in our case, dropping it ensures that the results are not driven by the presence of Botswana in the group of countries with high stocks of democratic capital.

  13. The results are similar if we chose, e.g., 15 or 20 years of democratic experience as the cut-off point.

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Acknowledgements

The authors wish to thank Bill Shughart, Christian Bjørnskov and the participants in the Paldam Workshop for helpful comments.

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Appendix:  Variable descriptions and summary statistics

Appendix:  Variable descriptions and summary statistics

Table 3 Descriptive statistics

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Justesen, M.K., Kurrild-Klitgaard, P. Institutional interactions and economic growth: the joint effects of property rights, veto players and democratic capital. Public Choice 157, 449–474 (2013). https://doi.org/10.1007/s11127-013-0143-1

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Keywords

  • Economic growth
  • Institutions
  • Property rights
  • Veto players
  • Democracy