Paper Information

Journal:   SOCIAL WELFARE   SPRING 2010 , Volume 10 , Number 36; Page(s) 11 To 26.
 
Paper: 

DEMOCRACY AND ECONOMIC GROWTH: A WORLDWIDE QUANTITATIVE SURVEY

 
 
Author(s):  AHANGARI A.A.M., MEHREGAN N., REZAEI R.A.
 
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Abstract: 

Research Problem: Economic growth and development is a complicated process that falls into the domain of many disciplines in social sciences and humanities. Therefore to study these fundamental aspects of economic growth synthesizing in these fields is necessary. In this research using endogenous growth models and political literature, we present a model for political economy of growth. The main question that this study is going to answer is the relation between democracy and economic growth. There are some well known documents that have studied the relationship between democracy and economic growth in the literature in this area. Because of ambiguous results of them, it is needed to test the relationship by using new data and methods.
Method: to test the relation between democracy and economic growth, using panel data of 62 countries in the period 1980-2000 in this paper we study the effects of democracy on economic growth through fixed effects model. To measure democracy index, we use a mixed variable which includes political and freedom rights. Per capita GDP growth is used to measure economic growth rate. Stata8 and Eviews5 software are used to get econometrics results.
Concluding remarks: Despite of a lot of studies that focus on the negative effects or inefficiency of democracy, we find the positive and significant effects of democracy on economic growth. We also come to this conclusion that economic growth negatively is related to the inflation, interest groups, and government consumption on the other hand it is positively related to the human capital, investment, population growth, female labor force, and active population.
Conclusions: according to results, we conclude that any improvement in the democratic institutions is required to have significant economic growth. Also, to catch higher economic growth, education enhancing, democratic institutions, reduction in government intervention in economy, investment and increasing in female labor force participation can be helpful.

 
Keyword(s): DEMOCRACY, ECONOMIC GROWTH, FIXED EFFECTS, POLITICAL ECONOMY
 
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