The Effect of Democracy on Economic Growth in Developing Countries

Abstract

The factors effecting economic growth of countries have changed after globalization movements began. Various studies showed that the effects of economic factors have remained insufficient in explaining economic growth and suggested the democracy level as a new explanatory varible in growth studies. In relation to growth-democracy nexus, this study aims at exploring the effect of democracy on economic growth in developing countries for 1992-2017 using Kónya (2006) panel causality test. According to results, the effect of democracy on economic growth is negative in Argentina, Brazil, Bulgaria, Indonesia, Armenia, Malaysia, Nigeria, Peru, Chile and Turkey; the effect of democracy on economic growth is positive in China, Georgia, Hungary, Macedonia, Egypt, Romania and Russia. Finally, no relationship between democracy and economic growth has been found in Azerbaijan, South Africa, India, Paraguay and Ukraine.