Economic liberalization, political regimes and ideology

Abstract

This paper assesses how economic freedom is affected by the ideological stance, being the first to analyse the role of dictatorial regimes and their ideological orientations. Using annual data for 145 countries over the period 2000‐2017 and a two‐step system GMM estimator, this study finds that democracies do promote more economic freedom than authoritarian regimes, but not in all circumstances The probability that economic liberalization is promoted is higher for right‐wing dictatorships than for other autocracies and comparable to other types of democratic ruling, with the exception of right‐wing democratic governments that strongly benefit liberalization. These right‐wing governments, alongside (the negative effect of) non‐right‐wing dictatorships, seem to be the main contributors to explaining why democracies in recent years are promoting more economic liberalization than autocracies. Additionally, our results suggest that democratic governments not ideologically identifiable seem to share a common dislike for policies that promote liberalization.

Electoral cycles and public spending during the pandemic

“…The studies of the effects of PBC more often focus on democratic countries, as the standard PBC theory assumes that elections are held competitively and fairly. Following Castro and Martins (2021), we split our sample into democratic and nondemocratic countries using the Polity2 indicator from the Polity 5 Project Database. That variable ranges from −10 ( strongly autocratic countries ) to +10 ( strongly democratic countries ) (CSP, 2022).…”

“…That variable ranges from −10 ( strongly autocratic countries ) to +10 ( strongly democratic countries ) (CSP, 2022). A standard in the literature approach is classifying countries as democratic if Polity2 is greater than 5 (e.g., Castro & Martins, 2021; Gootjes et al, 2021; Klomp & de Haan, 2016). The left panel of Figure 5 shows a strong and significant effect of PBC on the share of social assistance and income protection in the SP stimulus budget in democratic countries.…”

Not following the script: When institutional development is uneven

“…The basic message of the modernisation hypothesis is that all elements of modernity are correlated with one another. But concerning the causal effects of one institution on the others, nearly all findings are positive: democracy on economic freedom (Castro & Martins, 2021; Giuliano et al, 2013; Grosjean & Senik, 2011); democracy on state capacity (Bologna Pavlik & Young, 2020; Grassi & Memoli, 2016; Wang & Xu, 2018); economic freedom on democracy (Boudreaux & Holcombe, 2017; Dorsch & Maarek, 2015; Nieswiadomy & Strazicich, 2004); and economic freedom on state capacity (Apergis et al, 2012; de Soysa, 2016; Saunoris, 2024). There is more uncertainty concerning a causal linkage of state capacity on democracy (Andersen et al, 2014; Herrera & Martinelli, 2013), although the importance of such an ordering has been a common argument in political science for decades (Huntington, 1968).…”