Democratic Outcomes

Question 1

Olson

Answer 1

1. Property rights and constraints on government are necessary for economic growth.
2. Only formal institutions of democracy are capable of providing necessary conditions for stable, long-term economic growth, because limited time horizons prevent dictatorships from committing
3. Conditions underpinning democracy (e.g. rule of law, independent judiciary, etc.) also provide protection for individual rights that enables development

Question 2

Acemoglu et al

Answer 2

Democracy causes growth. Democratic transitions increase GDP per capita by about 20% in the long run. Exploit waves of democratisation to identify the causal effect
Another study - used settler mortality rates used as exogenous determinant of contemporary political institutions that provide for protection against risk of expropriation. Find evidence of strong causal effect of institutions on income per capita

Question 3

Acemoglu and Robinson

Answer 3

Redistribution - authoritarian governments favour interests of elites vs democracies favour broad range of interests

Question 4

North

Answer 4

Property rights are protected under a democracy, government cannot arbitrarily seize private property, encourages investment and growth

Question 5

Przeworski and Limongi

Answer 5

1. Examined 18 different studies, concluding that 8 dictatorships grew faster, 8 democracies grew faster, 5 had no effect - hence inconclusive
2. Rule of law, protecting intellectual property, patents, with stability of legal outcomes, protecting against expropriation, independent judiciary important. BUT is this the ‘liberal’ part of a liberal democracy and market liberalism, rather than the democracy itself?
3. Democracies are less redistributive than we thought - 1) problem with system, or 2) median voter does not want redistribution? Eg. imperfect democracy with high amount of elite control, or other cleavages like cultural issues they care more about

Question 6

Meltzer and Richard

Answer 6

More redistribution
As suffrage expands, the position of the median voter (whose preferences determine government policy) shifts down in the income distribution. Universal suffrage - median voter earns median income, less than mean income under inequality. Hence more economic redistribution

Question 7

Boix

Answer 7

1. Impact of econ development on public sector size conditional on political regime and level of electoral participation
2. Democracy - politicians respond to voters’ demands so public sector grows parallel to structural changes and modernisation from economic development

Question 8

Brown and Hunter

Answer 8

Latin America
1. In poor countries during economic crisis, democracies increase the allocation of resources to social programs relative to authoritarian regimes
2. Autocracies more constrained by economic forces, democracies more constrained by popular demand
3. 17 Latin American countries

Question 9

Przeworski et al

Answer 9

No conclusive evidence either supporting democracy or dictatorship: total output grows at same rates
1. Higher inequality may be good (so democracies bad for development) - higher relative income can lead to higher rates of savings and investment and spur growth. Majority rule can also lead to policies less favourable to growth than policies that provide opportunities to just a limited part of the population
2. Arguments that democracies and dictatorships may be separately good for growth are not mutually exclusive (and could explain why there are not aggregate effects across the board) - eg. democracy hinders growth by reducing investment, and fosters growth by promoting allocative efficiency: the rate at which productive factors grow may be higher under dictatorship, but the use of resources more efficient under democracy

Question 10

Lee thesis

Answer 10

1. LKY - democratic rights and freedoms may give rise to demands for redistribution that can hamper economic growth by undermining economic efficiency, and authoritarianism may isolate technocrats from such popular pressures
2. Strong state with developmental objectives (developmental state) necessary for extensive planning and regulation needed to promote growth in late industrialising countries, e.g. East Asian Miracle economies (Singapore, South Korea, Taiwan). Autocracies can mobilise state resources to shift people into more efficient sectors during industrial growth
3. Can still redistribute from an instrumental perspective, to reduce inequality and achieve other outcomes

Question 11

Barro

Answer 11

More political rights do not have an effect on growth. Rule of law is not strongly linked to democracy eg. Singapore has strong rule of law

Question 12

Gerring et al

Answer 12

The net effect of democracy on growth performance cross-nationally over the last five decades is negative or null

Question 13

Tabellini

Answer 13

Not democracy per se that creates higher growth; but because the key challenge for most developing countries is to create the basic legal and institutional infrastructures that protect property rights, enforce private contracts and allow individuals to freely take advantage of market opportunities

Question 14

Besley and Kudamatsu (intro)

Answer 14

Democratic institutions encourage public goods provision because of representation, accountability and selection

Question 15

Sen

Answer 15

1. democracies allow the poor to penalise governments that allow famines to occur, so political leaders, acting strategically, will try and avert famines.
2. democracies are better than nondemocracies at transmitting information from poor and remote areas to the central government due to freedom of press. Even if democratic and nondemocratic leaders are equally devoted to stopping famine, democracies are more likely to know when action is needed
3. For economic growth to be achieved, social reforms eg. improvements in education and public health must precede economic reform

Question 16

Acemoglu and Robinson quote

Answer 16

Democracy is ‘dictatorship of the poor or middle classes’, because they represent higher preferences for redistribution and public goods

Question 17

Lake and Baum

Answer 17

1. Lower barriers to exit/costs to participation in a democracy make the political market more contestable, forcing states to increase public goods provision while extracting fewer rents.
2. Evidence of positive impact of democracy on life expectancy at birth, as well as on literacy and school enrolment rates.
3. Mechanism - states act as firms which produce public services in exchange for revenue. Their monopoly on legitimate use of force leads to a comparative advantage in producing goods where collective action problems, informational asymmetries, contractual impediments etc which otherwise create market failures

Question 18

Belsey and Kudamatsu (content)

Answer 18

Democratic elections provide ‘mechanisms for selecting competent and honest leaders to implement policy’. Elections are not only about rewarding/sanctioning past performance, but selecting good leaders

Question 19

Persson and Tabellini

Answer 19

1. Democratic capital (nation’s historical experience with democracy and by the incidence of democracy in its neighborhood) reduces exit rate from democracy and raises exit rate from autocracy.
2. Higher democratic capital stimulates growth in an indirect way by decreasing the probability of a successful coup.
3. Virtuous circle - accumulation of physical and democratic capital reinforce each other, promoting economic development jointly with the consolidation of democracy
4. Based on data on political regimes and GDP per capita for about 150 countries over 150 years

Question 20

Caveats for benefits of democracy

Answer 20

1. Lindert - depends on turnout
2. Persson et al - presidential democracies spend less than parliamentary democracies
3. Bates - different ethnic groups care about different types of public groups - if they are geographically concentrated they can have divergent interests over outcomes, leading to the underprovision of some goods
4. Baldwin and Huber - demonstrate that between-group inequality (BGI) has a large, robust and negative relationship with public goods provision

Question 21

Ross

Answer 21

1. Country-level data may have biased samples, and self-reported data can exclude high-performing non-democracies, which have no incentive to report
2. When missing data is imputed, regime type has little or no effect on infant mortality.
3. The fact that democracies spend more money is actually evidence of a subsidy to middle and upper-income groups, and they do not reach the poor nor produce better social outcomes.
4. Hypothesis: democracies subsidize the budgets of middle- and upper-income groups who can afford to buy food and health services privately, but not the poor, who find food and health services unaffordable. Under these conditions, an increase in government health spending would allow middle- and upper-income groups to switch from private to public services, while leaving low-income groups unaffected

Question 22

Kudamatsu

Answer 22

Data for robust ‘within-mother’ analysis, which compares children born to the same mothers before and after democratic transitions. Demonstrates a significant positive impact of democracy on infant mortality in sub-Saharan Africa
BUT problems with data - 1) country data only shows broad, aggregate effects, 2) data often relies on the validity of government-reported figures

Question 23

Hecock

Answer 23

Primary education spending varies across Mexican states according to the competitiveness of elections (useful sub-national analysis that avoids the aforementioned pitfalls)

Question 24

Harding and Stasavage

Answer 24

Democracies have incentives to prioritise certain types of public policies - focus on attributable policies, where effort is most likely to be visible and be rewarded, especially in states with low state capacity. In Africa, this led to the abolition of primary school fees, but not an increase in school inputs such as teachers (even though this led to an increase in primary school attendance)

Question 25

Harding

Answer 25

Low levels of urbanisation in Africa create incentives to prioritise rural voters. Looks through individual level data which allows within-household/mother analysis of education and health outcomes

Question 26

Miller

Answer 26

Even multiparty elections in electoral authoritarian regimes predict better health and education outcomes than in non-electoral autocracies - shows that electoral accountability matters

Question 27

Tsai

Answer 27

Don’t need democracy, can use informal institutions of accountability. ‘Solidary groups’ in rural Chinese villages spread information about the performance of local officials; officials are sensitive to this information because it affects their moral standing in the community, thereby operating as an alternative to electoral incentives. An analysis of 316 villages finds that the presence of certain solidary groups were significantly related to better public goods provisions, including school classrooms

Question 28

Besley and Burgess

Answer 28

1. Incumbents exert more effort when there is greater media activism, due to more informed citizens
2. State governments in India respond more effectively to food security crises where newspaper circulation is higher