Democracy for Better Governance and Higher Economic Growth in the MENA Region?

Abstract

Democracy is valued in itself. The extent to which a citizen is able to live in an open society and participate in its democratic process directly affects his/her wellbeing. But democracy can also affect welfare indirectly through its effects on other aspects of the social and economic interactions that influence the wellbeing of people. Democracy can often positively affect the relative rights of social groups, such as gender-specific groups or minorities. In the economic area democracy may affect the distribution of income, with democracies, for instance, tending to pay higher wages and improve human capital. It may also affect the volatility of incomes, with democracies tending to produce fewer recessions and affect the economic rate of growth. Nobel Prize Laureate Amartya Sen observes that famines never occurred under democratic regimes.

The views expressed in this chapter are entirely those of its authors, and should not be attributed to the World Bank or its Board of Directors. We are grateful for the many insights, comments and ideas contributed by Hasan Abuyoub and Samir Makdisi, as co-panelists, and Mouna Cherkaoui, Jean-Paul Fitoussi, Heba Handoussa, Janos Kornai, Timur Kuran, and Gérard Roland. We thank Daron Acemoglu for sharing the transformed Freedom House Political Rights Index data. We would also like to thank Ibrahim Elbadawi, Phillip Keefer, Paloma Anos-Casero, Farrukh Iqbal and Robert Beschel for helpful comments and suggestions, and to Paul Dyer and Claudia Nassif for their effective research assistance.