Has Democracy Slowed Growth in Asia?

SummaryHas democracy slowed growth in Asia? While there are a number of reasons to suggest that it has, no one has tested this hypothesis. Hypotheses linking Asia’s democracies and autocracies to growth are tested in a within panel regression framework that controls for country fixed effects, global time fixed effects, the other major variables affecting growth, and for endogeneity between the right-hand side regressors. The democracy slows growth hypothesis is tested against the toughest counterfactual—the bureaucratically capable authoritarian regimes of East Asia’s developmentally minded governments. Findings reject the democracy slows growth hypothesis and show that democracy causes growth and investment to rise.