Democracy and Reforms

Amin, Mohammad; Djankov, Simeon

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Democracy and Reforms

CEPR Discussion Paper No. DP7151

27 Pages Posted: 18 Feb 2009

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: January 2009

Abstract

We use a sample of 147 countries to investigate the link between democracy and reforms. Democracy may be conducive to reform, because politicians have the incentive to embrace growth-enhancing reforms to win elections. On the other hand, 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. We test 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 a robust support for the claim that democracy is good for growth-enhancing reforms.

Keywords: Democracy, Reform, Regulation

JEL Classification: K20, L51, P11, P16

Suggested Citation: Suggested Citation

Amin, Mohammad and Djankov, Simeon, Democracy and Reforms (January 2009). CEPR Discussion Paper No. DP7151, Available at SSRN: https://ssrn.com/abstract=1345677