Does Democracy Cause Inclusive Growth?

• In Event: Contemporary Challenges of Democracy and Inclusive Growth

Abstract

Does democracy cause inclusive growth? While a large literature has studied the (positive) impacts of democracy on economic growth broadly speaking, the question of whether democracy translates into an improvement of the pre-tax income of the bottom half of the population remains unanswered. Because the bottom half does not, by default, include the median voter, standard political economy models fail to provide straightforward predictions about the consequences of democracy for inclusive growth. We theorize about the political conditions under which inclusive growth is more likely and test it using a global sample of countries since the 1970s. Results suggest that democracy is only weakly associated with inclusive growth but that particular political configurations of democratic politics (such as left-wing, democratic governments) have a positive effect on rates of inclusive economic growth. We conclude the paper by inviting further consideration about the political foundations of inclusive growth in the 21st century.

Authors

• Fernando Bizzarro, Boston College

• Ian Shapiro, Yale University