Democracy-growth nexus and its interaction effect on human development: A cross-national analysis

- The effect of democracy-growth nexus on HD is examined through 170 panel countries over 20 years.
- We find evidence that the effect from democracy to human development is nonlinear.
- The positive interaction effect of the nexus is sensitive to democratization process.
- Democracy is more crucial in developed countries, but economic growth is vital in developing countries.
- In order to enhance human development, economic growth needs to be emphasized in developing countries.

This paper examines the democracy-growth nexus and its interactive effect on human development by using cross-national panel data spanning over 20 years incorporating the effect of democratization process. We find evidence that the effect from democracy to human development is nonlinear and varies depending on the levels of growth and democracy. The results confirm that the interaction effect of democracy-growth nexus has a positive impact on human development but the effect is sensitive to democratization process and the level of a country's economic development. It is established that democracy is more crucial in developed countries, whereas economic growth is vital in developing countries. The findings imply that the role of democracy in enhancing human development should not be overemphasized as economic growth is vital in the developing countries.