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Democracy’s effect on economic growth: A pooled time-series analysis, 1951–1980

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Abstract

The relationship between democracy and economic growth has concerned social scientists since the 17th century, but recent democracy movements make this question especially important today. Do poor countries face a cruel trade-off between democracy and growth? Do democracy and growth go together as a “win-win” proposition? Or is democracy irrelevant to growth? Using pooled annual time-series data from 1951–1980 for 106 countries, including 88 non-core countries, we explore long-term and short-term direct and indirect effects of democracy on growth. Little or no direct effect emerges, but positive indirect effects appear via two mechanisms: a marginally significant effect via investment and a robust effect via government expenditure. Democracy also has a robust non-linear effect on economic growth via social unrest, inhibiting growth under non-democratic regimes and furthering it in highly democratic ones. Combining these findings, we conclude that democracy does not significantly hamper economic growth, and under many circumstances slightly boosts it.

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  1. Department of Sociology, University of North Carolina, 155 Hamilton Hall, CB#3210, 27599-3210, Chapel Hill, NC

    Charles Kurzman

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  1. Charles Kurzman
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  2. Regina Werum
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  3. Ross E. Burkhart
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Charles Kurzman is assistant professor of sociology at the University of North Carolina at Chapel Hill, and is currently studying modernist Islamic movements and democracy movements in the early 20th century.

Regina Werum is assistant professor of sociology at Emory University. Her research interests center on political sociology, sociology of education, and racial/ethnic stratification.

Ross E. Burkhart is assistant professor of political science at Boise State University, and his research interests include cross-national democratization patterns, comparative political economy, and public policy.

The authors thank Kenneth Bollen, Guang Guo, Alexander Hicks, Michael Lewis-Beck, Brian Powell, Eric Riles, numerous other colleagues, and the anonymous reviews for their assistance in the preparation of this article.

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Kurzman, C., Werum, R. & Burkhart, R.E. Democracy’s effect on economic growth: A pooled time-series analysis, 1951–1980. St Comp Int Dev 37, 3–33 (2002). https://doi.org/10.1007/BF02686336

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