Date of Award
Honors Thesis (Colby Access Only)
Colby College. Economics Dept.
Considerable study has been directed towards examining the effect of democracy on economic growth. Because the cause of democratization differs across countries, additional research should include the years leading up to a democratic transition. Economic crises, marked by high inflation, depressed economic growth, and financial turmoil, can largely contribute to the decision to establish a democracy. In order to understand how different types of democratization affects subsequent economic growth, thirty-nine transitions were divided into two categories. The first type is an endogenous event, where a country changes its regime primarily due to a deteriorating economy. The second group is an exogenous transition, which occurs when a state undergoes reform for reasons unrelated to its economy. To identify each of the thirty-nine episodes, a narrative approach was used by conducting extensive research on each country's political and economic situation in the years leading up to its democratic transition. Following this, statistical analysis was employed on each group to determine its relationship to economic growth. Thus, the simultaneity bias that results when an endogenous change occurs was eliminated. This study will conclude that there is a difference between each transition type on economic growth: endogenous change corresponds to a statistically significant increase in growth while exogenous transitions have no effect on growth.
Democratization, Economic growth, Political history
Recommended CitationSlipowitz, Amy, "The Effect of Democracy on Economic Growth" (2012). Honors Theses. Paper 658.
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