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Title The Impact of Democracy on Economic Growth in Developing Countries

Author(s) Ms. Abida Awan

Abstract The association between democracy and economic growth is being debated for a very long time. Despite a lot of empirical and theoretical literature, no conclusive results have been obtained regarding the influence of democracy on economic growth. Within this framework, this study aims to factually scrutinize the influence of democracy on economic growth for selected advanced and developing Asian economies from the period of 1996 to 2019. This study adopts the panel FMOLS (Fully Modified Ordinary Least Square) approach to draw empirical insight about the link between democracy and growth. For drawing useful empirical consensus, the study also performed several important diagnostics tests such as panel unit root test, cross-sectional dependence test, and co-integration test. Findings of FMOLS model shows that democracy tends to improve economic growth in developed, developing, and Asian countries. This is also reported that corruption control index positively increases economic growth in developing and developed Asian countries. Other determinants such as education, population, and investment also report an important and positive increase in economic growth in developing, developed, and Asian nations. In contrast, consumption tends to reduce economic growth in developing, developed, and Asian economies. The outcomes of the study recommend that democratic norms must promote in order to restrain corruption and boost the economic growth of the nations. It is also suggested that institutional quality should be strengthened in order to obtain fruitful outcomes of democratic regimes and human capital should be accumulated in order to increase economic growth. Keywords: Structure, Scope, and Performance of Government, Economic Growth, Comparative Study of Countries. JEL Codes: H11; F43; O57.

Type Thesis/Dissertation

Faculty Management Sciences

Department Economics

Language English

Publication Date 2023-03-14

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