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Democracy and Economic Growth: A Historical Perspective

Published online by Cambridge University Press:  13 June 2011

John Gerring ,
Philip Bond ,
William T. Barndt  and
Carola Moreno
John Gerring
Affiliation:
Boston University
Philip Bond
Affiliation:
University of Pennsylvania
William T. Barndt
Affiliation:
Princeton University
Carola Moreno
Affiliation:
Boston University
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Abstract

Recent studies appear to show that democracy has no robust association with economic growth. Yet all such work assumes that the causal effect of democracy can be measured by a country's regime status in a particular year (T), which is correlated with its growth performance in a subsequent period (T+l). The authors argue that democracy must be understood as a stock, rather than a level, measure. That is, a country's growth performance is affected by the number of years it has been democratic, in addition to the degree of democracy experienced during that period. In this fashion, democracy is reconceptualized as a historical, rather than a contemporary, variable—with the assumption that long-run historical patterns may help scholars to understand present trends. The authors speculate that these secular-historical influences operate through four causal pathways, each of which may be understood as a type of capital: physical capital, human capital, social capital, and political capital. This argument is tested in a crosscountry analysis and is shown to be robust in a wide variety of specifications and formats.

Type
Research Article
Information
World Politics , Volume 57 , Issue 3 , April 2005 , pp. 323 - 364
Copyright
Copyright © Trustees of Princeton University 2005

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References

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49 Correlations between Polity2 and other democracy indices (introduced below in the text) are as follows: “Political Rights” (Freedom House) = -.85; “Liberal Democracy” (Bollen) =.92; “Democracy index” (Vanhanen) = .85.

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53 This recoding affects the following countries: Albania (1900–1912, Ottoman Empire), Andorra (1900-present, France), Armenia (1900–1990, Russia/USSR), Azerbaijan (1900–1990, Russia/USSR), Belarus (1900–1990, Russia/USSR), Bosnia-Herzegovina (1908–17, Austria-Hungary; Yugoslavia 1929–91), Croatia (1900–1917, Austria-Hungary; Yugoslavia, 1929–91), Czech Republic (1900–1917, Austria-Hungary), Slovakia (1900–1917, Austria-Hungary), Estonia (1900–1916 and 1941–90, Russia/USSR), Finland (1900–1916, Russia), Georgia (1900–1990, Russia/USSR), Iraq (1900–1917, Ottoman Empire), Palestine/Israel (1900–1917, Ottoman Empire), Kazakhstan (1900–1990, Russia/USSR), Kyrgyzstan (1900–1990, Russia/USSR), Latvia (1900–1917 and 1941–90, Russia/USSR), Lithuania (1900–1917 and 1941–90, Russia/USSR), Macedonia (1922–90, Yugoslavia), Moldova (1900–1945, Romania; 1946–90, USSR), Mongolia (1900–1920, China), Bangladesh (1947–71, Pakistan), Slovenia (1900–1917, Austria-Hungary; 1929–91, Yugoslavia), Syria (1900–1917, Ottoman Empire), Tajikistan (1900–1990, Russia/USSR), Turkmenistan (1900–1990, Russia/USSR), Ukraine (1900–1917 and 1920–90, Russia/USSR), Uzbekistan (1900–1990, Russia/USSR), and East Timor (1976–99, Indonesia).

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74 We interpolate missing values for illiteracy, life expectancy, and population growth in order to maintain a consistent sample (failing to do so would have significantly reduced the sample size and perhaps biased our results).

75 See Papaioannou and Siourounis (fn. 1); Przeworski et al. (fn. 1).

76 An additional test—not shown—divides the sample into (1) observations where a country registers a “positive” democratic stock (>0) and (2) observations where a country registers a “negative” democratic stock (<0). This tests the possibility that our aggregate results are being driven by influential groups of long-term democracies or long-term autocracies. Reassuringly, the coefficients and standard errors for our key variable, democracy stock, are virtually constant across these two subsamples, suggesting that there is a relatively consistent democratic growth effect for deep autocracies and deep democracies.

77 The number of years that a country growing at rate g takes to double its income is given by ln 2/ln

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