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Political Order and Inclusive Economic Development

Comparative Politics
Democracy
Development
Political Economy
Luis Camacho
German Institute of Development and Sustainability
Lilli Banholzer
Luis Camacho
German Institute of Development and Sustainability
Joerg Faust

Abstract

There is a strong correlation between democratic governance and economic development. Moreover, democratic governance is generally associated with better healthcare and education, lower levels of inequality, higher rates of rural electrification, and many more desirable outcomes. Scholars have explained these correlations by arguing that governments face greater incentives for providing public goods within democratic regimes, as their survival hinges on the favor of a majority of the people. They have also argued that certain features of democratic regimes, like freedom of press, freedom of association, and freedom to protest, make it easier for governments to be informed of the needs and wants of the citizenry. There are, however, several autocratic regimes that have performed remarkably well in terms of economic growth as well as in raising living standards, especially among economically disadvantaged groups. At the same time, several democratic governments have been unable to produce such improvements. Given these mixed records, this paper seeks to identify the institutional features of both democracies and autocracies that are associated with pro-poor growth. Our main hypothesis is that regimes that have institutionalized succession mechanisms as well as mechanisms that allow information to flow from the people to the government, and vice versa, should be better at producing this type of growth. To evaluate this hypothesis we analyze time-series cross-sectional data gathered from various sources, including the Polity IV Project, the World Development Indicators (WDI), and the Demographic and Health Surveys (DHS) program.