The Impact of Democracy on Economic Growth

This paper will seek to find out if democratic states and non-democratic states are able to best produce economic growth. This topic is important as it will help in understanding how the two types of regimes influence economic growth. The research is also important to policy makers as it will help in instituting the best economic policies which will promote development. Besides, the recommendations will create room for further studies in the similar area. Historically, controversial debates have centered on the question of how the type of democracy in the political realm helps in fostering or hindering economic growth. Arguments in favor of democracy allude that democratic leaders observe rule of law which promotes better economic performance. Besides, democracy leads to the well-functioning institutions, promotes consumption, and upholds the civil rights of people which are key factors in economic growth. On the other hand, for non-democratic states, the leaders pass polices which undermine investment. This paper seeks to establish how democracy promotes economic growth and how non-democratic nations are an impediment to growth. The paper will delve into the analysis of non-democratic states to find out to which extent these states affect the economic growth. The argument holds that democracy is a key factor in promoting economic growth.



Democracy and Economic Growth



The research paper attempts to explain both how both democracy and non-democratic impact on key factors of development such as infrastructure, education and industrial development. Here, the paper will seek to outline the democratic nations and nondemocratic nations. The GDP of the nation for the past five years will be outlined and the longitudinal as well as the cross sectional data will be analyzed. A comparison will be made from the data to establish the correlation between democracy and the growth level. Evidence will also be drawn from the nations' per capita income, level of investment and the policies out in place that are geared towards economic growth. Regime Legitimation Expert Survey (RLES) will draw the focus on the countries under study which will help in making a contrast between the nations. The information will be critical to explaining if the type of regime affects their economic growth.



The study intends to answer a more general theory of the relationship between democracy and economic growth. The countries that will be compared include those which are democratic and non-democratic. Singapore, Chile, Hong Kong, Taiwan and South Korea are democratic nations that will be studied. The economic development of these nations are impressive and the extent of democracy in the countries denotes to significantly impact on the growth level. The nations promote free market economy and are therefore economically free. The people are relieved the burden of economic regulations and excessive taxation. They have secure property rights as well as follow the rule of law which promotes political freedom.



On the other hand, Democratic Republic of Congo, Iraq, Morocco, and Libya are the non-democratic nations which will be studied. These countries do not observe the rule of law and have dictatorship leaders. The non-democratic states have low economic growth. In these nations, political leaders simply form personal interest groups and thus lose their political freedom. The impact is that the notion compromises on the free market institutions while these are fundamental to the economic growth. In drawing the comparison, the Regime Legitimation Expert Survey will be used in identifying the procedures and performance of the authoritarian regimes.



Annotated Bibliography



Baum, M., " Lake, D. (2003). The Political Economy of Growth: Democracy and Human Capital. American Journal of Political Science, 47(2), 333. http://dx.doi.org/10.2307/3186142



Baum and Lake mention that democracy is an essential factor that boosts economic growth. According to the article, there are indirect effects that democracy has on the growth of nations. The article indicates that education and public health are the fundamental indirect factors that influence development of a nation. Education and life expectancy are immediate proxies of human capital, and thus democracy is an important element that impacts on the level of public services and this is manifested in the two indicators. The findings of the paper state that democracy is statistically significant to indirect factors of growth demonstrated through increased life expectancy and education. This study is relevant as it highlights the indirect effect that democracy has on the economic growth of a country.



Charron, N., " Lapuente, V. (2010). Does democracy produce quality of government? European Journal of Political Research, 49(4), 443-470. http://dx.doi.org/10.1111/j.1475-6765.2009.01906.x



The study analyzed the impact of political regimes on the capacity of the nation to produce the quality of government (QoG). According to the researchers, there is an association between democracy and the QoG.  Charron and Lapuente argue that QoG is a function of forces of demand and supply which are both constitutes of economic development. The article ascertains that in democratic nations, the leaders tend to have a strong incentive to improve QoG. Good governance coupled with QoG foster economic and social development. The research is pertinent to the area of study as it explains why the democratic states perform better economically compared to the authoritarian ones.



Doucouliagos, H., " Ulubaşoğlu, M. (2008). Democracy and Economic Growth: A Meta-Analysis. American Journal of Political Science, 52(1), 61-83. http://dx.doi.org/10.1111/j.1540-5907.2007.00299.x



The study also draws a robust conclusion on the relationship between democracy and economic growth. The researchers confirm that democracy does not have a direct impact on economic growth. However, Doucouliagos and Ulubaşoğlu assert that democracy does have indirect effects as it leads to higher human capital, lower political instabilities and inflation as well as a higher level of economic freedom. According to the document, democracy is majorly associated with the larger developed governments. The study is applicable as it shows that the net effects of democracy to a country are significant in promoting development.



Knutsen, C. (2012). Democracy and economic growth: A survey of arguments and results. International Area Studies Review, 15(4), 393-415. http://dx.doi.org/10.1177/2233865912455268



Knutsen in his study delves into the analysis of the impact of democracy on the economic growth. The document presents descriptive statistics on how dictatorship and democracy affect development. It also highlights that democracy correlates with economic growth as it promotes stability. Besides, nations that embrace a democratic rule promote excellent economic management and economic performance as well as maintaining well-functioning of the institutions. However, non-democratic states experienced a dramatic economic decline due to dictatorship and poor polices. Moreover, the countries witness decomposition of factories and degradation of the infrastructure and economic freedom. The political survival reasons of the rulers in the non-democratic states make the leaders to neglect key aspect of the economies such as education and health. Rather, a substantial amount of public revenue is normally pocketed by the leaders. The applicability of this article to the area of study is centered on the fact that dictatorship makes the regime to lack rule of law which affects development.



Przeworski, A., " Limongi, F. (1993). Political Regimes and Economic Growth. Journal of Economic Perspectives, 7(3), 51-69. http://dx.doi.org/10.1257/jep.7.3.51



The authors explain how political regimes relate to economic performance. According to them, democracy influences the rights of citizens and the equality in the allocation of resources. The political regime also has importance on distribution of income and consumption which impact on the overall development. However, in a non-democratic state, the citizens suffer from oppression and inequalities in resource distribution which hinder development. Again, for the non-democratic state, people who have private property suffer as leaders tend to use their power to take what is not rightfully theirs. The document goes ahead to explain that non-democratic states influence investment which is a key factor in aggregate demand and thus the GDP level. However, state fairness enhances economic performance as it will make the market and economic factor run efficiently. The study is relevant due to the fact that it explain the way democracy affects allocation of resources which is vital in explaining growth.



References



Baum, M., " Lake, D. (2003). The Political Economy of Growth: Democracy and Human Capital. American Journal of Political Science, 47(2), 333. http://dx.doi.org/10.2307/3186142



Charron, N., " Lapuente, V. (2010). Does democracy produce quality of government? European Journal of Political Research, 49(4), 443-470. http://dx.doi.org/10.1111/j.1475-6765.2009.01906.x



Doucouliagos, H., " Ulubaşoğlu, M. (2008). Democracy and Economic Growth: A Meta-Analysis. American Journal of Political Science, 52(1), 61-83. http://dx.doi.org/10.1111/j.1540-5907.2007.00299.x



Knutsen, C. (2012). Democracy and economic growth: A survey of arguments and results. International Area Studies Review, 15(4), 393-415. http://dx.doi.org/10.1177/2233865912455268



Przeworski, A., " Limongi, F. (1993). Political Regimes and Economic Growth. Journal of Economic Perspectives, 7(3), 51-69. http://dx.doi.org/10.1257/jep.7.3.51

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