Study: Democracy fosters economic growth

Thursday, March 7, 2019 - 00:50 in Mathematics & Economics

As long as democracy has existed, there have been democracy skeptics — from Plato warning of mass rule to contemporary critics claiming authoritarian regimes can fast-track economic programs. But a new study co-authored by an MIT economist shows that when it comes to growth, democracy significantly increases development. Indeed, countries switching to democratic rule experience a 20 percent increase in GDP over a 25-year period, compared to what would have happened had they remained authoritarian states, the researchers report.  “I don’t find it surprising that it should be a big effect, because this is a big event, and nondemocracies, dictatorships, are messed up in many dimensions,” says Daron Acemoglu, an MIT economist and co-author of the new paper about the study. Overall, Acemoglu notes, democracies employ broad-based investment, especially in health and human capital, which is lacking in authoritarian states.  “Many reforms that are growth-enhancing get rid of special favors that nondemocratic regimes have...

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