Economics
in Democratization through the looking-glass

This chapter looks at how economists approach democracy and identifies the main themes that have emerged in economics. The principal focus is on the developing countries, but with some references to the literatures for the developed and transition countries. The possible ways in which democracy may raise the growth of Gross Domestic Product (GDP) per capita include its effects on the following factors, such as the creation of property and contract rights and the formation of economic policy. The chapter then shows that empirical research finds both the positive and negative effects of democracy on growth. Societies which are sharply polarized can experience the economic problems under both democracy and autocracy. Reducing inequality is therefore essential if they are successfully to democratize and develop. Finally, the chapter shows that democracy can have strongly positive effects on human development, but that democratic consolidation is essential for such effects to manifest themselves.

Editor: Peter Burnell

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