Democracy and Economic Growth: How Regional Context Influences Regime Effects

Abstract

There is ongoing controversy as to whether political democracy inhibits or facilitates national economic growth. It is argued here that the answer to this question depends greatly on the regional political context within which democracy functions. In regions where social groups clamour for redistribution, as in Latin America, democracy may lead to populism and poor economic performance. Similarly, in regions where state elites are generally committed to promoting rapid industrialization, as in parts of Asia, democratic pressures may impede effective economic policy. However, in regions where patrimonialism is chronic, as in Sub-Saharan Africa, democracy may provide a useful mechanism for evicting grossly corrupt politicians and may therefore facilitate higher rates of economic growth. These regional arguments are tested statistically here and show that democratic governance constrains growth in Latin America and Asia yet facilitates growth in Africa. Sensitivity analyses indicate that these findings are fairly robust.