NEW EVIDENCE ON THE RELATIONSHIP BETWEEN DEMOCRACY AND ECONOMIC-GROWTH

It is often maintained that democracy is a luxury which comes at a pri ce in terms of subsequent slower increases in national living standard s. However, various recent cross-section studies on economic growth ha ve found evidence that lack of civil and political liberties is negati vely correlated with economic growth. Using a new measure of democracy , which is based upon the number of years that a country can be regard ed as a democracy, the robustness of this relationship is examined. Bo th direct and indirect effects of lack of democratic liberties are ana lysed. Our main conclusion is that the relationship between democracy and economic growth is not rubust.