Ideal democracy - a shortcut to economic growth?

This paper is a cross-national panel study on the linkages between economic growth and democracy. The main purpose of this study is to analyze whether there is a significant difference in how different types of democracies affects a countries economic growth. The two dimensions of democracy examined are electoral and liberal democracies. The electoral democracy index is commonly referred to as the minimal definition of democracy and includes a number of institutional features such as free and fair elections and freedom of expression and association. The liberal democracy index goes one step further and adds two main aspects on top of the electoral democracy: the protection of individual liberties and institutional checks and balances. The results of this paper confirm that there is a difference between the two dimensions of democracy. The results suggest that there is a positive relationship between democratization and economic growth. The results suggest that countries with a higher score on the electoral democracy index experience a higher growth rate when democratized. We found no statistical evidence that countries with a high score on the liberal democracy would experience higher growth. Therefore, our results indicate that countries with a higher value on the electoral democracy index tend to have a higher growth