Abstract
Capital accumulation has long been considered one of the driving forces behind economic growth. The idea that democratic experience accumulates and depreciates like other forms of capital is a relatively unexplored idea. Much like financial and physical capital, it has been suggested that democracy is a necessary but insufficient condition for economic growth. Building on the work of Persson and Tabellini (2006), this paper constructs several alternative calculations of democratic capital. These values of democratic capital are then compared to GDP, as a measure of prosperity, and economic freedom for 161 countries. The results of this analysis support the idea that democracy acts indirectly through economic freedom to enhance prosperity. The causal relationships between democracy, economic freedom, and prosperity are self-perpetuating.
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