From the readings assigned, I think I have developed a standpoint, albeit an inconclusive one, on the effects (or lack thereof) of democracy on economic growth. I was most convinced by Przeworski and Limongi’s piece and am inspired to utilize similar critiques for discussing problems with the other explanations and statistical analyses of the relationship at hand. I appreciate the separation that they make by first offering a qualitative critique of some common causal mechanisms used to explain to the relationship, and then looking at quantitative problems with the statistical models utilized in previous studies. The three causal mechanisms that Przeworski and Limongi identify as being the most commonly used to explain the relationship between political regimes and economic growth can be summarized as follows:

(1) Democracy –> Property rights –> Motivation to accumulate capital–> Economic growth

(2a) Dictatorship –> Autonomy of state –> More efficient decision-making –> Economic growth

(2b) Dictatorship–> Autonomy of dictator–> No interest in maximizing total output; only personal gain–> Economic stagnation

(3) Democracy –> Pressures for immediate consumption–> Reduction in investment–> Economic stagnation

The point I find most valuable in their paper is their critique of previous findings from statistical analyses. There are three clearly differentiable conclusions about this relationship between democracy and economic growth: (1.) Democracy has a positive effect on economic growth (2.) Democracy has a negative effect on economic growth; and (3.) Democracy (political regime type) has no effect on economic growth. The other readings reflect Przeworski and Limongi’s summation of these views. Gerring et al.’s overarching conclusion is that “Long term democracy leads to stronger economic performance.” (356) Similarly, Persson and Tabellini conclude that the overall effect of democracy on economic growth is a positive one. Chanagul observes a mix between the first and third view: in countries that are already well-off, democracy acts as a catalyst for even more growth, but in countries with low initial income, democracy does not have a significant effect. Goldstone and Mina make a different differentiation, arriving at a conclusion that mixes the first and second views: stable democracy is accompanied by longterm economic growth, but unsuccessful or protracted, transitional ‘democracy’ negatively affects economic development.

The critique that Przeworski and Limongi provide is simple and can apply to all of the readings mentioned above: none of them adequately address the problem of endogeneity inherent to the relationship between regime type and economic growth. To quote Przeworski and Limongi: “If democratic regimes are more likely to occur at a higher level of development or if democracies and dictatorships have different chances of survival under various economic conditions, then regimes are endogenously selected.” (62) The possibility of reverse causality leads to speculations about whether or not a causal relationship between regime type and economic growth exists at all. Przeworski and Limongi ultimately conclude with a hunch that the observed correlation may be a spurious one and there may be an alternative explanatory variable: “politics does matter, but “regime type” does not capture the relevant differences.” Frankly, it is easy to agree with Przeworski and Limongi; to sum up their conclusions, they basically say “we do not know.” While I will most definitely utilize their approach in critiquing the other papers, I am worried about what such an inconclusive evaluation will mean for the second goal of this paper of offering a clear recommendation for the Foundation. Looking forward to discussing this further at the in-class workshop tomorrow.