The Nexus Between Democracy and Economic Growth: Evidence from Dynamic Simultaneous-Equations Models
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The Nexus Between Democracy and Economic Growth: Evidence from Dynamic Simultaneous-Equations Models Nedra Baklouti 1 & Younes Boujelbene 2
Received: 14 May 2015 / Accepted: 12 May 2016 # Springer Science+Business Media New York 2016
Abstract The present paper is aimed to estimate an econometric model whereby the interrelationship between democracy and economic growth can be thoroughly investigated. For this purpose, dynamic simultaneous-equation panel data models have been applied to 12 MENA countries studied over the period 1998–2011. The reached empirical results have revealed that a bi-directional causal relationship appears to persist between democracy and economic growth. Keywords Economic growth . Democracy . Dynamic simultaneous-equations models JEL Classification B22 . C36 . D73
Introduction The present work is conceived to analyze the evolution of thinking that helps drive political scientists and economists regarding the relationship between political regime and overall growth. As a widely recognized phenomenon, democracy helps in protecting citizens and guaranteeing their fundamental human rights. Still, the spread of democracy does not seem to have overwhelmingly reached the Middle East region. Indeed, the authoritarian regimes have been father consolidated there and managed to survive even after the occurrence of the third wave of democracy, maintaining resistance to the frequent challenges of democratization for many reasons, exceeding the scope of this document (Heydemann 2007).
* Nedra Baklouti [email protected]
1
Unit of Research in Applied Economics URECA, Faculty of Economics and Management, University of Sfax, Airport Road Km 4, Sfax 3018, Tunisia
2
Faculty of Economics and Management, University of Sfax, Sfax, Tunisia
J Knowl Econ
The question, then, lies in whether the authoritarian political regimes, ruling the MENA countries, have actually managed to survive the various democratic growth waves and economic development opportunities (to what extent). So, an attempt will be made to determine the nature of the relationship governing the region’s development level and the feature of its political regime. The nexus between economic growth and democracy has made subject of several academic research works and studies elaborated over the past few decades (see, e.g., Rodrik and Wazciarg 2005; Persson and Tabellini 2006; Papaioannou and Siourounis 2008; Acemoglu et al. 2008; Benhabib et al 2011; Benedikt Heid et al. 2012; MoralBenito and Bartolucci 2012; Yi Che et al. 2013). The empirical results documented by such studies have been various, sometimes contradictory, and appear to differ as to the causality trend. So, the paper is focused on empirically investigating such as relationship across the 12 MENA countries, observed over the period 1998–2011. This relationship is explored through a dynamic simultaneous-equation modeling approach for the purpose of investigating the two-way causal relationship between real GDP and democracy. This study is intended to provide a modest contrib
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