I think the democracy-growth connection is more nuanced than suggested here. Most of the biggest growth accelerations have occurred in autocracies. In terms of total welfare produced, most of the gains in human welfare have been driven by huge growth episodes in autocracies after 1950.
“democracies do not necessarily outperform autocracies in a growth acceleration episode, though they are likely to prevent large growth collapses. We also highlight the importance of the type of autocracy in understanding the effects of regime type on growth. When we disaggregate the type of autocracy, we find that party-based autocracies outperform democracies in growth acceleration episodes, though they do not limit the fall in the magnitude in growth deceleration episodes in comparison to democracies.
Our findings have implications for both for the previous literature on the relationship between democracy and growth as well as the literature on democratic transitions. They suggest that, while democracy may indeed lead to higher per capita incomes in the long run (as has been found by Acemoglu et al. 2014) or reduce the volatility of growth in the short run (as has been found by Mobarak, 2005), developing countries with democratic regimes are less likely to observe the rapid growth acceleration episodes that have been observed for certain types of autocracies, though they are less likely to suffer from the growth collapses that are prevalent in many autocracies. Further, our findings indicate that the transitions to democracy that we observe with increasing frequency in many parts of the developing world may not necessarily lead to rapid economic development, if the transition is from party-based autocracies to democracies. For the international development policy community, this suggests that it matters what type of autocracy is in place in a given country when pushing for democratic transition in that country.”
Thank you for this comment—I think one advantage of the Acemoglu et. al. (2019) paper published in the Journal of Political Economy (https://economics.mit.edu/files/16686) is that it accounts for the economic crises that generally precede transitions to democracy—democracies initially grow slowly as they emerge out of depressions, and then grow faster as they invest in capital, education and health. One reason existing studies had found mixed effects is that they hadn’t properly accounted for these dynamics. I think there are also strong second-order effects on global growth of democracy because democracies impose lower tariffs on other countries—especially on other democracies—and democracies rarely if ever fight each other. Peace and trade are likely to enhance global growth—though these externalities may be difficult to properly measure.
I haven’t read any of the papers cited here, nor am I especially well-versed in relevant areas of economics. But my initial reaction to “Most of the biggest growth accelerations have occurred in autocracies” is that that sounds like a correlation that’s relatively unlikely to be explained by autocracy causing more growth, and relatively unlikely to conflict with the idea that democracy causes better growth (with all other factors held constant).
In particular, I’ve heard it argued that “catch-up” growth is substantially easier than “cutting-edge” growth. If that’s true, then that might suggest autocracies might have experienced growth accelerations more often than democracies not because being an autocracy causes a higher chance of having a growth acceleration, but rather because:
it happens to be that autocracies have less often been on the “cutting edge” than democracies, so they’ve more often been able to engage in “catch-up” growth
on top of that, being an autocracy makes it more likely that a country will have deceleration episodes, which then creates additional opportunities for “catch-up” growth
A related or perhaps identical possibility is that autocracies may sometimes implement policies that actively harm their economies in major ways, such that merely removing those policies could cause rapid growth. (I have in mind the transition from Mao’s policies to Deng Xiaoping’s policies, though I don’t know much about that transition, really.)
This is all rather speculative. I’d be interested to hear thoughts on this from someone with more knowledge of the area.
I think the democracy-growth connection is more nuanced than suggested here. Most of the biggest growth accelerations have occurred in autocracies. In terms of total welfare produced, most of the gains in human welfare have been driven by huge growth episodes in autocracies after 1950.
“democracies do not necessarily outperform autocracies in a growth acceleration episode, though
they are likely to prevent large growth collapses. We also highlight the importance of
the type of autocracy in understanding the effects of regime type on growth. When
we disaggregate the type of autocracy, we find that party-based autocracies
outperform democracies in growth acceleration episodes, though they do not limit the
fall in the magnitude in growth deceleration episodes in comparison to democracies.
Our findings have implications for both for the previous literature on the relationship
between democracy and growth as well as the literature on democratic transitions.
They suggest that, while democracy may indeed lead to higher per capita incomes in
the long run (as has been found by Acemoglu et al. 2014) or reduce the volatility of
growth in the short run (as has been found by Mobarak, 2005), developing countries
with democratic regimes are less likely to observe the rapid growth acceleration
episodes that have been observed for certain types of autocracies, though they are
less likely to suffer from the growth collapses that are prevalent in many autocracies.
Further, our findings indicate that the transitions to democracy that we observe with increasing frequency in many parts of the developing world may not necessarily lead to rapid economic development, if the transition is from party-based autocracies to democracies. For the international development policy community, this suggests that it matters what type of autocracy is in place in a given country when pushing for democratic transition in that country.”
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2893112
Thank you for this comment—I think one advantage of the Acemoglu et. al. (2019) paper published in the Journal of Political Economy (https://economics.mit.edu/files/16686) is that it accounts for the economic crises that generally precede transitions to democracy—democracies initially grow slowly as they emerge out of depressions, and then grow faster as they invest in capital, education and health. One reason existing studies had found mixed effects is that they hadn’t properly accounted for these dynamics. I think there are also strong second-order effects on global growth of democracy because democracies impose lower tariffs on other countries—especially on other democracies—and democracies rarely if ever fight each other. Peace and trade are likely to enhance global growth—though these externalities may be difficult to properly measure.
I haven’t read any of the papers cited here, nor am I especially well-versed in relevant areas of economics. But my initial reaction to “Most of the biggest growth accelerations have occurred in autocracies” is that that sounds like a correlation that’s relatively unlikely to be explained by autocracy causing more growth, and relatively unlikely to conflict with the idea that democracy causes better growth (with all other factors held constant).
In particular, I’ve heard it argued that “catch-up” growth is substantially easier than “cutting-edge” growth. If that’s true, then that might suggest autocracies might have experienced growth accelerations more often than democracies not because being an autocracy causes a higher chance of having a growth acceleration, but rather because:
it happens to be that autocracies have less often been on the “cutting edge” than democracies, so they’ve more often been able to engage in “catch-up” growth
on top of that, being an autocracy makes it more likely that a country will have deceleration episodes, which then creates additional opportunities for “catch-up” growth
A related or perhaps identical possibility is that autocracies may sometimes implement policies that actively harm their economies in major ways, such that merely removing those policies could cause rapid growth. (I have in mind the transition from Mao’s policies to Deng Xiaoping’s policies, though I don’t know much about that transition, really.)
This is all rather speculative. I’d be interested to hear thoughts on this from someone with more knowledge of the area.