Institutions, democracy and economic growth. Facts, theories and beyond

Growth and democracy represent two profound aspirations of mankind: prosperity and freedom. Their relationship endorses great interests among scholars, philosophers and even common citizens. This book is an attempt to offer empirical evidence, theoretical analysis and further perspectives on the effects of democracy on economic growth. As to the empirical evidence, over the last three decades democracy and growth have run in parallel, as most countries experienced a synergic success in improving both prosperity and freedom. Behind this evidence, though, we remain in need of further exploring the concepts of democracy and growth and their relation, especially in view of the fact that the econometric approaches seem to reach inconclusive results as to whether democracy fosters or hinders economic growth. The exploration is undertaken by addressing both political science and economics contributions to the understanding of the democracy/growth nexus. Thus, it is possible to clarify the theoretical paradox and to develop an original framework of analysis to address the issue. The analysis of this book highlights a core characteristic of the relationship between democracy and growth, namely: the nexus exists, it is strong, but it is indirect, channelled by institutions. Institutions – properly “unbundled” – are pivotal in the transmission of the effects of democracy on growth. The present book provides a framework for the analysis of the relationship between institutions, democracy and growth and it is proposed to scholars in the field of social sciences, post-graduate students and simply curious people. The exposition of the topics is maintained as plain as possible, and postpones technical and methodological issues in the Appendix.