Democracy and Reforms

Amin, Mohammad; Djankov, Simeon

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Democracy and Reforms

World Bank Policy Research Working Paper No. 4835

27 Pages Posted: 20 Apr 2016

See all articles by Mohammad Amin

Simeon Djankov

London School of Economics & Political Science (LSE); Peterson Institute for International Economics

There are 3 versions of this paper

Date Written: February 1, 2009

Abstract

The authors use a sample of 147 countries to investigate the link between democracy and reforms. Democracy may be conducive to reforms, because politicians have the incentive to embrace growth-enhancing reforms to win elections. By contrast, authoritarian regimes do not have to worry as much about public opinion and may undertake reforms that are painful in the short run but bring future prosperity. This paper tests these hypotheses, using data on micro-economic reforms from the World Bank's Doing Business database. These data do not suffer the endogeneity issues associated with other datasets on changes in economic institutions. The results provide robust support for the claim that democracy is good for growth-enhancing reforms.

Keywords: Parliamentary Government, Legal Products, Labor Policies, Public Sector Corruption & Anticorruption Measures, Emerging Markets

Suggested Citation: Suggested Citation

Amin, Mohammad and Djankov, Simeon, Democracy and Reforms (February 1, 2009). World Bank Policy Research Working Paper No. 4835, Available at SSRN: https://ssrn.com/abstract=1344720