Democracy Does Cause Growth

By Daron Acemoglu, Suresh Naidu, P. Restrepo, James A. Robinson. Journal of Political Economy, 2019

1,485 citations recorded by the source corpus.

We provide evidence that democracy has a positive effect on GDP per capita. Our dynamic panel strategy controls for country fixed effects and the rich dynamics of GDP, which otherwise confound the effect of democracy. To reduce measurement error, we introduce a new indicator of democracy that consolidates previous measures. Our baseline results show that democratizations increase GDP per capita by about 20 percent in the long run. We find similar effects using a propensity score reweighting strategy as well as an instrumental-variables strategy using regional waves of democratization. The effects are similar across different levels of development and appear to be driven by greater investments in capital, schooling, and health.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/2a4c767fddcf37036dcf6360b2b9951a82a493de

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Citations in the corpus

Bias in Local Projections (2020, neutral): “Papers like Acemoglu et al. (2019) have argued that T as small as 40 should make the bias in panel LP estimators relatively small. While the bias documented by Nickell (1981) is small at h = 1 when controls are included, that bias can be large at h = 10 even when T is relatively large.”
The European Trust Crisis and the Rise of Populism (2017, background): “Recent theoretical works on the political economy of populism include Acemoglu et al. (2013), Mukand and Rodrik (2017), Guiso, Herrera and Morelli (2017), and Di Tella and Rotemberg (2016).”
The political economy of reforms in central bank design: evidence from a new dataset (2018, positive): “Evidence of spatial or regional clustering is often found for various reform processes such as democratic and liberal economic policies (Simmons and Elkins, 2004; Elhorst et al., 2013; Giuliano et al., 2013; Acemoglu et al., 2018).”
The economic impact of universities: Evidence from across the globe (2016, neutral): “5 See, for example, Acemoglu, Johnson, & Robinson (2005a), Acemoglu et al. (2014) who argue institutions matter a lot, and Gerring, Bond, Barndt, and Moreno (2005) for a summary of papers that conclude that they do not. to universities.6 Feng and Valero (2018) use international data to show that…”
A Practical Guide to Counterfactual Estimators for Causal Inference with Time-Series Cross-Sectional Data (2020, methodology): “In Xu (2017), the results from IFEct and MC are qualitatively different from those using FEct or two-way fixed effects; in Acemoglu et al. (2019), all three methods point to a much smaller in magnitude, but more credible, estimate than that from two-way fixed effects.”
Autocratic Elections: Stabilizing Tool or Force for Change? (2017, background): “Drawing inspiration from the literature on how regimes and particular institutions impact on economic outcomes (Persson and Tabellini, 2003; Knutsen, 2011; Huber, Ogorzalek and Gore, 2012; Acemoglu et al., 2014) we construct different instruments tapping variation among neighboring countries, and gl”
Family Business Growth Around the World (2020, positive): “Moreover, as firms grow faster in open and expanding economies (Acemoğlu et al., 2019; Beck et al., 2008), we controlled for GDP growth (calculated as the annual percentage growth rate of real GDP)4 and Trade proxies (calculated as the sum of exports and imports of goods and services of a country…”
Populist Leaders and the Economy (2020, methodology): “Using data on 175 countries from 1960 to 2010, Acemoglu, Naidu, Restrepo, and Robinson (2019) used panel regressions to relate democratic transitions to a GDP per capita increase of approximately 20% in the long run (over 25 years).”