The Relationship between Democracy, Freedom, and Economic Development

In this study, firstly democratic thoughts which directly or indirectly affect economic development and/or the interaction between authoritarian regimes and the economic development and the direction and channels of this interaction were studied and then the study tried to determine how democracy affects economic development. It was concluded that the positive contributions of democracy to economic development were more determinant than the effects that were either negative or restrictive in terms of development. When compared to autocracy, since democracy is more successful in managing social conflicts, ensuring political stability and preventing social disasters such as famine, it contributes more to economic development. Democracy also facilitates delegation of authority, provides a stable investment environment and accelerates mobilization of resources in accordance with economic growth/development. Democracy leads to an increase in human capital accumulation and increases the growth rate through reducing income inequality. It can be said that democratic regimes are the most appropriate ones in terms of increasing economic performance and supporting economic development through their strong institutional structures and the assurance they will ensure in property rights.

Authors:

• Ugur Karakaya
• Hasan Bulent Kantarcı

Keywords:

• Autocratic Regime
• Democracy
• Economic Development
• Economic Freedom.

References:

[1] John W. Dawson, “Causality in the freedom-growth relationship”,
European Journal of Political Economy, no.19, issue. 3, pp.479-495,
September 2003
[2] Seymour Martin Lipset, Political Man: The Social Bases of Politics,
New York: Doubleday Company, 1960, p. 48
[3] Seymour Martin Lipset, ‘‘Some social requisites of democracy:
economic development and political legitimacy’’ American Political
Science Review, no.53, pp. 69–105, 1959
[4] Zygmunt Bauman, Özgürlük, Çev. Vasıf Erenus, İstanbul: Sarmal
Yayınevi, 1997, p. 64
[5] Manfred G. Schmidt, Demokrasi Kuramlarına Giriş, Çev. M. Emin
Köktas, Ankara: Vadi Yayınları, 2001, p. 13
[6] Stefan Blum, Ricardo José Rocha Guimãraes‘‘Do the poor need
democracy? Tracing the debate on democracy and pro-poor
development’’ ZEF Center for Development Research, University of
Bonn , p. 6, January 2004
[7] Şafak Ural, ‘‘Demokrasi kavramı toplumsal değerler ve birey’’ İlahiyat
Fakültesi Dergisi, vol. 40, pp. 451-459, 1999
[8] Human Development Report 2014,
http://www.pnud.org/br/arquivos/RDH2014.pdf (Erişim: 11-3-2015)
[9] Vaman Rao, ‘‘Democracy and economic development’’ Studies in
Comparative International Development, volume.19, pp. 67-81, 1984
[10] Mancur Olson, ‘‘Dictatorship democracy and development.’’, American
Political Science Review, vol. 87, no. 3, pp. 567-576, September 1993
[11] Boutros Boutros-Ghali and et al, The interaction between democracy
and development, Paris: United Nations Educational, Scientific and
Cultural Organization, UNESCO, 2002, p. 10
[12] Robert J. Barro, ‘‘Determinants of economic growth: A cross-country
empirical study’’ National Bureau of Economic Research (NBER)
working paper, no. 5698, pp. 1-79, 1996
[13] Adam Przeworski, Fernando Limongi, “Political Regimes and Economic
Growth”, Journal of Economic Perspectives, vol. 7, no: 3, pp.51-69,
1993
[14] Pranab Bardhan, Democracy and development: A complex relationship,
Toronto: Faculty of Law, University of Toronto, 1997, pp. 1-26
[15] Said Adejumobi, “Between democracy and development in Africa: What
are the missing links?” in Annual Bank Conference on Development Economics in Europe Proceedings: 1999- 2000, Word Bank Conference
on “Development thinking in the next millennium”, Paris, 2000, pp.1-16
[16] Jagdish N. Bhagwati “Democracy and development: Cruel dilemma or
symbiotic relationship?’’, Review of Development Economics, vol. 6,
issue. 2, pp. 151-162, June 2002
[17] Alberto Alesina, Roberto Perotti, ‘‘The political economy of growth: A
clinical survey of recent literature’’, The World Bank Economic Review,
vol. 8, issue. 3, pp. 351-371, 1994
[18] R. Hall, C.I Jones, ‘‘What have we learned from recent empirical growth
research?” American Economic Review Papers and Proceedings, vol.
82, issue.2, pp. 173-177, 1997
[19] Paolo Mauro, “Corruption and growth”, The Quarterly Journal of
Economics, vol. 110, no. 3, pp. 681-712, Aug. 1995
[20] Deepa Narayan, “Moving out of poverty: Growth and freedom from the
bottom-up”, Word Bank moving out poverty study workshop, pp. 1-18,
2003
[21] Stephaine Olk, “The relationship between economic development and
democracy in Africa: A quantitative and qualitative perspective’’, 2003
https://www.uni-trier.de/fileadmin/fb3/POL/Studium/Ausgewaehlte_
Abschlussarbeiten/olk.pdf
[22] Thomas Gale Moore, “Freedom and Economic Growth’’ in On
progress: its reality, desirability and destiny, 2008
http://www.stanford.edu/~moore/Chapter6.pdf.
[23] José Tavares, Romain Wacziarg, ‘‘How democracy affects Growth?’’,
European Economic Review, vol. 45, ıssue.8, pp. 1341-1378, August
2001
[24] Larry Sirowy, Alex Inkeles ‘‘The Effects of Democracy on Economic
Growth and Inequality: A Review’’, Studies in Comparative
International Development, Vol. 25, No. 1, pp. 126-157, Spring 1990
[25] Xavier Sala-i-Martin, GernotDoppelhofer, Ronald. I. Miller,
Determinants of long-term growth: A Bayesian averaging of classical
estimates (BACE) approach,” American Economic Review, American
Economic Association, vol. 94, ıssue.4, pp. 813-835, September 2004
[26] Douglass North, Institutions, Institutional Change and Economic
Performance, Cambridge: Cambridge University Press, 1990, pp. 83-91
[27] Stephan Haggard, Robert R. Kaufman, The political economy of
democratic transitions, New Jersey: Princeton University Press, 1995,
p.27
[28] Edward N. Muller, ‘‘Economic determinants of democracy’’, American
Sociological Review, vol. 60, no.6, pp.966-982, Dec. 1995
[29] Samuel P. Huntington, The third wave: democratization in the late
twentieth Century, University of Oklahoma Pres, 1991, pp.68-69
[30] Kenneth A. Bollen, ‘‘Political democracy and the timing of
development’’ American Sociological Review, Vol.44, no.4, pp. 572-
587, 1979
[31] Francis Fukuyama, The end of history and the last man, New York: The
Free PresA Division of Macmillan, Inc., 1992, pp.117-118
[32] Pierre Coulange, ‘’Institution et développement économique’’, Journal
des Economistes et des Etudes Humaines, vol. 5, no: 1, pp. 27-28, Mars
1994
[33] Abbas Pourgerami, Development and democracy in the third world,
Boulder : Westview Press, 1991, p.28
[34] Reuven Brenner, The Eastern Bloc: Legalreforms first, monetary and
macroeconomicpolicies second, Montréal: Université de Montréal,
Centre İnteruniversitaire de Recherche en Economie Quantitative, 1990,
p.48
[35] Pierre Maillet, Philippe Rollet, La croissance économique, Paris: Presse
Universitaire de France, Edition Puf, 1998, p. 68
[36] Catherine Kessedjian,’’İntroduction, Privatisation’’ in Les Privatisation
en France, en Allemagne, en Grande-Bretagne et en Italie, Fabrice
Dion, Ed., Paris : La documentation française, no. 5024, 1995, p. 7
[37] Ray Rees, ‘‘Théories économiques des privatisations: Exemple de la
Grande-Bretagne’’ in Les privatisations en Europe, programmes et
problèmes, Mayenne : Acte Sud, 1993, p. 54-57
[38] Aron Janine ‘‘Growth and institutions, a review of evidence’’ The World
Bank Research Observer, vol. 15, no. 1, pp. 99-135, 2000
[39] Antonio Jose Alvarez, Cheibub Mike, ‘‘Classifying Political Regimes’’,
Studies in Comparative International Development, vol. 31, ıssue. 2,
1996
[40] Charles Kurzman, Regina Werum, Ross E. Burkhart “Democracy’s
effect on economic growth: A pooled: time-series analysis, 1951-1980”,
Studies in Comparative International Development, no. 37, ıssue.1,
pp.3-33, Spring 2002
[41] Jan Fidrmuc “Economic reform, democracy and growth during postcommunist
transition”, European Journal of Political Economy, vol.19,
ıssue.3, pp, 583-604, September 2003