Democracy and Economic Growth: A Meta-Analysis

Deakin University School of Accounting, Economics and Finance Working Paper Series No. 2006/04

39 Pages Posted: 13 Sep 2007

See all articles by Hristos Doucouliagos

Hristos Doucouliagos

Deakin University - School of Accounting, Economics and Finance

Mehmet Ali Ulubasoglu

Deakin University - School of Accounting, Economics and Finance

Abstract

Despite a sizeable theoretical and empirical literature, no firm conclusions have been drawn regarding the impact of political democracy on economic growth. This paper challenges the consensus of an inconclusive relationship through a quantitative assessment of the democracy-growth literature. It applies meta-regression analysis to the population of 483 estimates derived from 84 studies on democracy and growth. Using traditional meta-analysis estimators, the bootstrap, and Fixed and Random Effects meta-regression models, it derives several robust conclusions. Taking all the available published evidence together, it concludes that democracy does not have a direct impact on economic growth. However, democracy has robust, significant, and positive indirect effects through higher human capital, lower inflation, lower political instability, and higher levels of economic freedom. Democracies may also be associated with larger governments and less free international trade. There also appear to be country- and region-specific democracy-growth effects. Overall, democracy's net effect on the economy does not seem to be detrimental.

Keywords: Democracy, economic growth, meta-analysis

JEL Classification: O4, P5

Suggested Citation

Doucouliagos, Chris (Hristos) and Ulubasoglu, Mehmet Ali, Democracy and Economic Growth: A Meta-Analysis. Deakin University School of Accounting, Economics and Finance Working Paper Series No. 2006/04, Available at SSRN: https://ssrn.com/abstract=1014333 or http://dx.doi.org/10.2139/ssrn.1014333

Chris (Hristos) Doucouliagos (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

Burwood, Victoria 3215
Australia

Mehmet Ali Ulubasoglu

Deakin University - School of Accounting, Economics and Finance ( email )

Burwood, Victoria 3215
Australia
+61 3 9244 6592 (Phone)

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