The Political Determinants of Economic Performance

Abstract

The authors present and test a theory about the effects of political competition on the sources of economic growth. Using Mankiw, Romer, and Weil’s model of economic growth and data for roughly 80 countries, the authors show that political competition decreases the rate of physical capital accumulation and labor mobilization but increases the rate of human capital accumulation and (less conclusively) the rate of productivity change. The results suggest that political competition systematically affects the sources of growth, but those effects are cross-cutting, explainingwhy democracy itself may be ambiguous. These findingshelp clarify the debate about regime type and economic performance and suggest new avenues for research.