Democracy and Economic Growth: a Literature Review

Ghardallou, Wafa; Sridi, Dorsaf

doi:10.1007/s13132-019-00594-4

Cited by 32 publications

(17 citation statements)

References 82 publications

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“…Their interdependence is mainly observed through the following dilemmas: Does (and to what extent) democracy stimulate or limit faster economic growth? (Ghardallou & Sridi, 2020) 3. Stringency Index is a composite measure based on nine response indicators including school closures, workplace closures, and travel bans, rescaled to a value from 0 to 100 (100 = strictest).…”

Section: Sources Of Data and Explanation Of Variables In The Modelmentioning

confidence: 99%

Economic Response of the European Countries to the First Wave of Covid-19

2021

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COVID-19 pandemic has caused the deepest crisis since the World War II. Many countries have slid into recession due to continuous GDP fall. Lockdown has an impact on unemployment growth, while the provision of health systems and state aid to vulnerable sectors and population are deepening fiscal deficits. Based on the example of 31 European countries (27 EU members and several countries with which the Union has different agreements), this research determines impact of key economic and social variables in period of the First wave of COVID-19 pandemic on the “Economic stimulus”, which is represented by composite index CESI. It is about a combination of variables: Democracy Index, Stringency Index, Final Consumption, Gross Investment, Health Expenditure, and Hospital Beds per Thousand People. Using the median method, the total sample has been divided into two groups, the one with less and the one with more infected people. The results of cross section regression analysis show that 52% variations in the Economic stimulus in the total sample is determined by predictor variables in the model. Analysis for the countries with less infected people shows that more than 75% variations in the Economic stimulus is determined by joint trends of the predictor variables, while the Analysis with more infected cases shows coefficient of determination (R2) over 71%. In general, the results of econometric analysis unambiguously show that democracy contributes to the economic policy response to pandemic in all three observed cases. Stringency index contributes to democracy in an inversely proportional sense, especially in the case of countries with larger number of infected persons. The same could be said for the variable Final Consumption in the case of the total sample of countries, where markedly reduced final consumption requires stronger economic reaction and the governmental aid of all the countries included in the sample.

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Section: Sources Of Data and Explanation Of Variables In The Modelmentioning

confidence: 99%

Economic Response of the European Countries to the First Wave of Covid-19

2021

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“…The literature on the relationship between democracy and economic growth is composite and evergrowing. A plethora of research has examined the effect of a political regime on economic growth and development, with the major focus being on the economic impact of a democratic political system in contrast to an autocratic one (Ghardallou & Sridi, 2019). Studies that have enquired into this relationship found a multitude of causality (Brunetti, 1997).…”

Section: Review Of Past Empirical Studiesmentioning

confidence: 99%

“…A more recent example is the Arab world uprisings during 2011 where the political regimes were shaken along with the economy. Analysts at the time predicted a top-down inversion of institutional order would induce economic prosperity, or, at the very least, shed a richer light on the fundamental relationship between the socioeconomic governing mechanisms and economic development (Ghardallou & Sridi, 2019).…”

Section: Introductionmentioning

confidence: 99%

The Efficacy of Democracy and Freedom in Fostering Economic Growth

Kabir¹,

Alam

2021

Emerging Economy Studies

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The relationship between democracy, freedom, and economic development has a multidisciplinary and diverse literature without a settled or concrete answer. Studies that attempt to validate this relationship have a cacophony of diametrically opposed narratives with a degree of dissonance that does not always articulate a complete understanding of the issue. This study attempts to contribute to the existing complex and ever-changing literature by empirically estimating whether democracy, personal and economic freedom affect economic growth. This paper empirically investigates 115 countries over the period 2006–2018 using panel regressions and found that the quality of democracy was significant in explaining the per capita income growth dynamics of a country. Economic freedom also has a statistically significant and positive relationship with per capita income progression. Personal freedom, on the other hand, is detrimental to growth in countries that have low levels of freedom but acts as a catalyst for growth when a society has reached a mature level of personal freedom. Other factors related to development entrapment such as income inequality, unemployment, and urbanization also have a significant impact on economic progression. In line with historical consensus, countries institutionally insulated from democracy fare worse economically than their democratic counterparts.

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“…In addition, the ability of the democratic government to manage conflicts strengthens the protection of property rights under a democratic regime. Therefore, by offering investors the necessary guarantees for the protection of their rights, democracy contributes to the development of capital markets relative to banks (Clague et al, 1996; Ghardallou, 2016, Ghardallou & Sridi, 2019; North & Weingast, 1989).…”

Section: Literature Reviewmentioning

confidence: 99%

Political origins of financial structure in developing countries

Ghardallou

2020

Review Development Economics

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Global financial crises have triggered a heated debate on the role of the financial system and its influence on the real economy. Indeed, during the 2008 subprime crisis, financial markets and banks played a dynamic role. On the one hand, they allowed the dissemination through the economy of poor-quality financial products (Emons, 1997;Stein, 2010). On the other hand, they contributed to the rapid recovery that took place in the United States, offering American companies alternatives to bank financing. In this respect, financial systems provide two main functions. First, they produce the information necessary for the realization of financial transactions and for the optimal allocation of

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Democracy and Economic Growth: a Literature Review

Cited by 32 publications

References 82 publications

Economic Response of the European Countries to the First Wave of Covid-19

Economic Response of the European Countries to the First Wave of Covid-19

The Efficacy of Democracy and Freedom in Fostering Economic Growth

Political origins of financial structure in developing countries

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