Democracy, Diversification and Growth Reversals

33 Pages Posted: 8 Oct 2009

See all articles by David Cuberes

David Cuberes

University of Sheffield

Michał Jerzmanowski

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: 0000

Abstract

There is much evidence that less democratic countries experience more high-frequency growth volatility. In this article we report a similar finding about volatility in the medium term: we find evidence that reversals of trend-growth are sharper and more frequent in non-democracies. Motivated by this evidence, we construct a model in which non-democracies have high barriers to entry for new firms. This leads to less sectoral diversification and so, in an uncertain environment, to larger growth swings in less democratic countries. We present empirical evidence that confirms the positive relation between democracy and industrial diversification.

Suggested Citation

Cuberes, David and Jerzmanowski, Michał, Democracy, Diversification and Growth Reversals (0000). The Economic Journal, Vol. 119, Issue 540, pp. 1270-1302, October 2009. Available at SSRN: https://ssrn.com/abstract=1484249 or http://dx.doi.org/10.1111/j.1468-0297.2009.02287.x

David Cuberes (Contact Author)

University of Sheffield ( email )

9 Mappin Street
Sheffield, S1 4DT
UNITED KINGDOM

HOME PAGE: http://merlin.fae.ua.es/cuberes/

Michał Jerzmanowski

affiliation not provided to SSRN

No Address Available

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