Kiel Working Papers, Kiel Institute for World Economics
Martin Paldam and Erich Gundlach
The Democratic Transition. A study of the causality between income and the Gastil democracy index
Abstract: The paper considers the transformation of the political
system as countries pass through the Grand Transition from a poor
developing country to a wealthy developed country. In the process most
countries change from an authoritarian to a democratic political system.
This is shown by using the Gastil democracy index from Freedom House.
First, the basic pattern of correlations reveals that a good deal of the
short- to medium-run causality appears to be from democracy to income. Then
a set of extreme biogeographic instruments is used to demonŽstrate that the
long-run causality is from income to democracy. The long-run result
survives various robustness tests. We show how the Grand Transition view
resolves the seeming contradiction between the long-run and the short- to
Keywords: Paths of development, democracy, biogeography; (follow links to similar papers)
JEL-Codes: B25,; O10; (follow links to similar papers)
23 pages, October 2008
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