February 08, 2006

Development and Democracy, Again

Torsten Persson and Guido Tambellini ask some questions about democracy and economic development in a new NBER paper (an earlier version here):
Does democracy promote economic development? We review recent attempts to address this question, which exploit the within-country variation associated with historical transitions in and out of democracy. The answer is positive, but depends – in a subtle way – on the details of democratic reforms.

Huh. This debate somtimes seems a bit muddled to me—when you start looking at things on the microscopic level, it's quite rare that any country will carry out all of its economic reforms (which, to NBER, tends to mean "liberalize early and liberalize often"), finish that up, and only then work on extending political rights. Usually these things happen in tandem. Usually they're interrelated. Little movements towards one might lead to little movements towards the other. Both "democracy" and "development" are complicated processes, and it's not always clear whether the question of "which should come first?" is as helpful as it should be. Still, it's an interesting set of findings, no doubt.

In other NBER news, Joseph Stiglitz and Sergio Godoy offer new evidence that rapid liberalization isn't all it's cracked up to be:
So much for "shock therapy," then.
-- Brad Plumer 2:58 PM || ||