Democracy and Economic Growth: A Meta Analysis

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C. Doucouliagos and M.Ulubasoglu. American Journal of Political ScienceJanuary 2008, v. 52, pp. 60-82.

Despite a sizeable theoretical and empirical literature, no firm conclusions have been drawn regarding the impact of political democracy on economic growth. This paper challenges the consensus of an inconclusive relationship through a quantitative assessment of the democracy-growth literature. We apply meta-regression analysis to the population of 483 estimates derived from 84 papers on democracy and growth. Using traditional meta-analysis estimators, the bootstrap, and Fixed and Random Effects meta-regression models, we derive several robust conclusions. Taking all the available published evidence together, we conclude that democracy does not have a direct impact on economic growth. However, it has robust, significant and positive indirect effects through higher human capital, lower inflation, lower political instability and higher economic freedom. Democracies may also be associated with larger governments and less free trade. There also appear to be country- and region-specific democracy-growth effects. Overall, democracy’s net effect on the economy does not seem to be detrimental.

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