Democracy and Economic Growth

Abstract

A common theorem of political economists is that democracy and income are strongly correlated. There are conflicting views on the direction of the causality. Coups that started due to non- economic reasons are shocks to democracy. I use such coups to test the hypothesis that democracy causes high economic development. My results suggest that anti-democratic coups have a significant negative effect on economic development. On the other hand, democracy has a strong positive effect on economic development. This study focuses on how an anti-democratic change in regime influences the income level in a country.