Perhaps the recent spectacular rise of some emerging market economies that are, at best, flawed democracies, has led some observers to downplay the importance of freedom in ensuring the long-term prosperity of societies. The causality between democracy and prosperity may run both ways. However, a wellfunctioning democracy becomes even more vital to economic growth as a country becomes more prosperous.
This is because the richer countries need to rely primarily on "smart growth", that is, increasing total factor productivity through innovation and technological change, while the poorer ones can grow robustly for long periods merely by imitating more advanced countries and adding more inputs of labor and capital.