Democracy and Economic Growth in an Interdependent World

17 Pages Posted: 16 Aug 2013

See all articles by Claude Diebolt

Claude Diebolt

University of Strasbourg

Tapas Mishra

International Institute for Applied Systems Analysis (IIASA)

Bazoumana Ouattara

University of Wales

Mamata Parhi

Swansea University

Date Written: September 2013

Abstract

We model dynamic interdependence in cross‐country economic growth processes by allowing it to vary according to democratic distance among economies. Stochastic distributional dynamics and temporal effects of democracy on economic growth are studied, and spatial variation in economic growth is explored. Among important results, democratic poverty trap is found to exist indicating the possibility of persistence of (un)stable democratic equilibria at different levels of democracy. Our cross‐sectional regression evinces that democracy has exerted significant growth‐enhancing effect and that the democratic distribution has steadily shifted locus from low‐level to high‐level equilibrium. Our spatial analysis of democracy‐economic growth nexus provide evidence of significant dynamic spatial autocorrelation and complementarity among countries' growth processes. Finally, it is demonstrated that the relevance of geographical proximity in facilitating interdependence in economic growth is overshadowed by relational proximity.

Suggested Citation

Diebolt, Claude and Mishra, Tapas and Ouattara, Bazoumana and Parhi, Mamata, Democracy and Economic Growth in an Interdependent World (September 2013). Review of International Economics, Vol. 21, Issue 4, pp. 733-749, 2013, Available at SSRN: https://ssrn.com/abstract=2311096 or http://dx.doi.org/10.1111/roie.12067

Claude Diebolt (Contact Author)

University of Strasbourg

Tapas Mishra

International Institute for Applied Systems Analysis (IIASA) ( email )

Schlossplatz 1
Laxenburg, A-2361
Austria

Bazoumana Ouattara

University of Wales ( email )

Singleton Park
Swansea, Wales SA2 8PP
United Kingdom

Mamata Parhi

Swansea University ( email )

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