Regime Change, Democracy, and Growth

by Caroline Freund, Peterson Institute for International Economics
and Mélise Jaud, World Bank

April 2014

Economic improvements generally accrue to countries that go through regime change, but not always when the change leads to democratization, according to a study on the relationship between democracy and growth by Caroline Freund and Mélise Jaud. The authors identify over 100 government type transitions in the last half century with various outcomes, to and from democracy, some partial, and some failed. Their research shows that transition to democracy yields no growth dividend compared to other types of regime change and that countries that democratize slowly do not gain in economic growth from regime change. These results suggest that the growth dividend from political transition results from swift resolution of uncertainty rather than from democratization.

Data disclosure: The data underlying this analysis are available here [xlsx].

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