Democracy, Property Rights, Redistribution and Economic Growth

37 Pages Posted: 10 Aug 2005

See all articles by Mark Gradstein

Mark Gradstein

Ben-Gurion University of the Negev - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); World Bank - Development Research Group (DECRG)

Date Written: July 2005

Abstract

Protection of property rights, as well as the burden of fiscal redistribution, have long been viewed as growth related factors. It is argued here that democratization may affect both. As the economy becomes more democratic, it creates high quality institutions such as public protection of property rights, but also becomes more responsive to fiscal demands. The analysis - which, we argue, is consistent with existing evidence - reveals that the net effect is likely to increase growth while at the same time reducing inequality. We also introduce the concept of a political bias and argue that its gradual reduction is the means to indirectly commit to high quality institutions. All this indicates, in particular, a strong link between democracy and institutional quality.

Keywords: Democracy, growth

JEL Classification: O11, P16

Suggested Citation

Gradstein, Mark, Democracy, Property Rights, Redistribution and Economic Growth (July 2005). CEPR Discussion Paper No. 5130, Available at SSRN: https://ssrn.com/abstract=781464

Mark Gradstein (Contact Author)

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
+97 2 8647 2288 (Phone)
+97 2 8647 2941 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

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HOME PAGE: http://www.cesifo.de

Centre for Economic Policy Research (CEPR)

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United Kingdom

World Bank - Development Research Group (DECRG)

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United States

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