Political democratization, economic liberalization, and growth volatility

► For countries that undertake only one liberalization, opening up the economy to international trade reduces volatility in growth; becoming a democracy, on the other hand, seems to increase macroeconomic instability. ► For countries that implement both political and economic liberalizations, no statistically significant effect on volatility is detected. ► Developing countries should liberalize their economy first and then consider political liberalization.