NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Democracy Does Cause Growth

Daron Acemoglu, Suresh Naidu, Pascual Restrepo, James A. Robinson

NBER Working Paper No. 20004
Issued in March 2014
NBER Program(s):   DEV   EFG   POL

We provide evidence that democracy has a significant and robust positive effect on GDP. Our empirical strategy relies on a dichotomous measure of democracy coded from several sources to reduce measurement error and controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy on economic growth. Our baseline results use a linear model for GDP dynamics estimated using either a standard within estimator or various different Generalized Method of Moments estimators, and show that democratizations increase GDP per capita by about 20% in the long run. These results are confirmed when we use a semiparametric propensity score matching estimator to control for GDP dynamics. We also obtain similar results using regional waves of democratizations and reversals to instrument for country democracy. Our results suggest that democracy increases future GDP by encouraging investment, increasing schooling, inducing economic reforms, improving public good provision, and reducing social unrest. We find little support for the view that democracy is a constraint on economic growth for less developed economies.

download in pdf format
   (424 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20004

Users who downloaded this paper also downloaded* these:
Heckman, Humphries, Veramendi, and Urzúa w19971 Education, Health and Wages
Acemoglu, Akcigit, and Celik w19894 Young, Restless and Creative: Openness to Disruption and Creative Innovations
Stiglitz w20014 Intellectual Property Rights, the Pool of Knowledge, and Innovation
Helliwell w4066 Empirical Linkages Between Democracy and Economic Growth
Barro w5698 Determinants of Economic Growth: A Cross-Country Empirical Study
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us