Democracy and statistical capacity

Abstract

ABSTRACT This paper addresses two questions. First, how is democracy related to statistical capacity? Second, do statistical capacity problems limit economic impact estimates? The results show that, first, democracy in 2004 is strongly associated with the World Bank’s overall statistical capacity index from 2004–18, even controlling for income and region effects. Second, when we regress the change in net export revenues on global commodity prices, we find that the (measured) net-export response to price shocks is 40–100% greater in countries with high statistical capacity. The measured growth response to export prices is at least 90% greater. The results suggest that it is important for researchers and policymakers to address statistical-capacity limitations.