Journal of Economic Growth, 4: 81–111 (March 1999)
c 1999 Kluwer Academic Publishers, Boston.
°
Economic Growth and Political Regimes
J. BENSON DURHAM
Columbia University, New York, NY 10027
The absence of continuous regime type measures that focus on institutions rather than outcomes besets studies on
whether democratic or authoritarian regimes grow faster. Additional shortcomings include the failure to consider
development stages and the erroneous endogenous specification of regimes. Given panel data on 105 countries from
1960 to 1989, the effective party/constitutional framework measure does not correlate with growth or investment
in the total sample. But considering development levels, some evidence indicates that discretion decreases growth
in advanced areas, and, contrary to theory, inhibits investment in poorer countries. Also, single-party dictatorships
have higher investment ratios but do not grow faster than party-less regimes.
Keywords: growth, investment, regimes
JEL classification: 040, 057
1.
Introduction
Do dictatorships or democracies better promote economic growth? Given strong normative
preferences for both democracy and development, this political economy question receives
much deserved attention among scholars as well as policy entrepreneurs. After considerable
debate and econometric evidence, however dubious, an influential literature review concludes that the inquiry “is wide open for reflection and research” (Przeworski and Limongi,
1993, p. 66). To begin, one must first inquire how regimes, which refer to the methods
politicians must use to gain and maintain control of the state, affect growth. The key causal
institutional characteristic of regimes is the degree of policymaker discretion or freedom
of action that such methods give sovereigns. Some social scientists recommend extensive
sovereign discretion, while others endorse limited government. Discretion is the crux of
both arguments.
Persistent problems in econometric studies warrant additional evaluation. First, and perhaps most important, the literature does not consider continuous proxies for regime type that
focus more acutely on institutions as opposed to outcomes. Given that arguments rest on the
continuous underlying concept of policymaker discretion, proxies for political regime type
should also be continuous and thereby distinguish among democracies and dictatorships,
hitherto a residual econometric category. Furthermore, considering the practical policy
implications of the debate, measures should capture a continuum of discretion with respect
to meaningfully serviceable institutional concepts, such as the number of effective political parties and constitutional frameworks, rather than outcome proxies that economists
routinely employ. Therefore, this article presents an alternative regime type proxy to com-
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plement existing measures that is continuous rather than discrete and objective rather than
subjective.
But before applying a measure that focuses more acutely on institutions, two additional
issues germane to this econometric question should be thoroughly outlined. First, existing
tests do not explicitly evaluate the tacit consensus that dictatorship is more useful in less
developed nations, while democracy is more suitable in advanced countries—a critical
addendum that posits ambiguous results for universal samples. Therefore, unlike previous
studies, the sample is divided according to levels of GDP per capita to approximate the
developmental circumstances under which discretion is either beneficial or debilitating.
Second, some social scientists erroneously suggest that the inquiry is intractably fraught
with simultaneity and/or survival bias. Rather, given the routine distinction between the
level and rate of economic development, the estimation problem is collinearity between
initial GDP per capita and regime type.
The remainder of Section 1 reviews the two competing perspectives. Section 2 outlines
the effective party/constitutional framework measure. Section 3 discusses additional econometric issues—namely, development stages and simultaneity and/or survivor bias, which
must be addressed before econometric estimation. Section 4 presents the econometric results for growth and investment in the total sample, across eight per capita GDP breaks, and
exclusively in authoritarian regimes. Section 5 concludes.
1.1.
The Authoritarian View
Authoritarian regimes bestow considerable discretion on sovereigns and are by definition
not susceptible to the “political business cycle.” In Kurth’s estimation, dictatorships more
effectively stimulate growth and investment by suppressing labor unions, wages, and consumer demand—very unpopular measures (1979, p. 334; see also March, 1988; Sirowy and
Inkeles, 1990). Put simply, democratic governments that wish to maximize tenure must
respond to popular demands for spending and consumption. Assuming considerable sacrifices associated with capital accumulation and inherently myopic voters, political parties
simply cannot simultaneously advocate sacrifices and win elections (Rao, 1984–85, p. 75;
see also Weede, 1983, p. 36).
Gershenkron’s early contributions are also illustrative and particularly relevant to historical development stages. Writing in contrast to the Marxist view that established industrial
countries foreshadow development for less developed areas, he argues that “the advantages
of backwardness,” the combination of cheap labor and technological backlogs, can accelerate development in poorer countries (1962, p. 8). Therefore, the rate of development differs
across cases, and the political consequences are clear—namely, the greater the initial backwardness, the greater the required state intervention necessary to affect industrialization.
Extensive state intervention, in turn, instinctively relates to authoritarian government. Effective policies require great sacrifice, and policymakers must have sufficient discretion to
command such (myopic) hardship from the subject polity.
An important subtlety to this view is that authoritarian rule is perhaps a necessary but
certainly not a sufficient condition for industrialization. That dictators do not always extol
discipline is not lost on Gerschenkron (1962, p. 20). Seemingly, regimes must be strong
ECONOMIC GROWTH AND POLITICAL REGIMES
83
enough to affect investment, yet that very strength can potentially inhibit resource allocation
and accumulation. This foreshadows the alternative view that democracy better fosters
development.
1.2.
The Democratic View
Unlike dictatorships, democracies limit sovereign discretion and thereby more effectively
promote economic growth because they solve the “credible commitment problem.” According to North and Weingast, if subjects suspect that sovereigns might alter property rights to
extract rents, they will have less incentive to invest. Therefore, sovereigns cannot merely
establish rights: they must also make subjects believe ex ante that they will not renege on
their commitments (1989, p. 803). In contrast to authoritarian regimes, democracies check
arbitrary rule, perhaps more effectively limit corruption, and thereby preserve established
property rights. As Scully suggests, legal uncertainties increase transaction costs, and capital accumulation increases with more secure legal claims on property and income (1988,
p. 653; see also Pourgerami, 1991, pp. 189, 194; Kohli, 1986, p. 165; Wittman, 1989,
pp. 1397, 1411).
Przeworski and Limongi reject this logic and consider the argument that democracy
protects property rights a “recent” and “far-fetched invention” (1993, p. 52). They list
Mackintosh, Ricardo, Macaulay, and Marx, who all suggest that extending suffrage to
lower classes threatens private property. One might add Laske to this list, but the recent
nature of the assertion that democracy ameliorates the credible commitment problem does
not make it wrong. While Przeworski and Limongi argue that North does not directly relate property rights to democracy, Olson (1993), whom the authors neglect in this context,
persuasively links the “state of nature,” sovereigns, property rights, and democracy. Very
briefly, Olson argues that distortionary taxes are lower in democracies compared to dictatorships. In democracies, both the incumbent and the majority receive wealth transfers,
as such governments redistribute some receipts to the constituents, while autocrats simply
indulge themselves.1 Coupled with the succession problem in dictatorships that supposedly debilitates long-run commitments, democracies are therefore more efficient because
at least some portion of the polity, the majority, also receives rents. Democratic consent
limits sovereign discretion, and therefore policymakers spread wealth beyond (presumably
kleptocratic) sovereigns to subjects.2
2.
Toward a Continuous Regime Type Measure with Institutional Referents
However efficient alternative regimes, arguments for either democracy or dictatorship ultimately rest on notions about sovereign constraint. The substance of policy notwithstanding,
regimes should either give sovereigns the freedom of action to take benevolent measures or
restrain them from malevolent actions. This central concept of discretion is a continuous
and not a dichotomous variable, as many studies dubiously conceive.
Also, the question has considerable ex ante proscriptive relevance: considering the ubiquitous preference for development, should new regimes in Congo, Indonesia, and Nigeria,
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for example, facilitate or inhibit executive action? Unfortunately, existing measures used
in econometric studies do not adequately capture the continuous nature of executive discretion and objectively measurable institutions that distinguish regimes. Of course, existing
scales, which influential studies such as Kormendi and Meguire (1985), Grier and Tullock
(1989), and Barro (1996) employ, are ordinal values in raw form, but these ex post measures
do not isolate specific institutions or address key constitutional choices relevant to policy
entrepreneurs.
2.1.
Common Econometric Measures
To begin a brief review of common measures, Jaggers and Gurr (1995) provide a useful discussion of the plethora of quantitative expressions of regime type. These include data sets
such as their own that are based on subjective criteria, including historical monographs,
and more objective data sets such as Vanhanen’s, which relies exclusively on electoral
data.3 Briefly, Jaggers and Gurr’s Polity III measures employ nine indicators of “institutionalized authority characteristics.” These indicators, in turn, endeavor to capture three
concepts—“the influence dimensions of authority,” “the recruitment of chief executives,”
and “government structure” (Jaggers and Gurr, p. 470). Another measure of regime type,
perhaps the most popular, is Gastil’s Freedom House dual indices of political and civil rights.
Political rights refer to the “capacity of individuals to participate freely and effectively in
the selection of policymakers and binding decision rules affecting the national, regional,
and local community.” Civil rights “are defined by the freedom of individuals to develop
views, institutions and personal autonomy apart from the state” (Jaggers and Gurr, p. 474).
Turning to validity and estimation, like Jaggers and Gurr’s, the Gastil indicators are
inherently subjective, and time-series validity of these indices is highly questionable. Even
the Freedom House judges readily admit that “changes in information and judgment since
1973 make many ratings not strictly comparable from year to year” (Gastil, 1987, p. 53).4
Validity aside, one might employ the ordinal forms to capture the degrees of executive
discretion, but the unit changes in both variables have little substantive meaning. As Clague
et al. note, the indices capture outcomes of processes rather than define specific features of
a democratic political system (1996, p. 251). They do not refer to the institutions involved
in, to borrow DiPalma’s (1990) phrase, “crafting democracies” ex ante. Few economists
or political scientists have an intuitive understanding of how, say, a country with a measure
of “1” differs from another with a measure of “5” on the twenty-one-point Polity III scale.
More important, policy entrepreneurs cannot readily replicate such outcomes in, say, Congo,
Indonesia, or Nigeria.
2.2.
An Alternative Proxy: The Effective Party/Constitutional Framework Measure
Given these practical shortcomings of common outcome measures, a useful alternative
measure of regime type should capture more servicable concepts that relate to the critical
notion of discretion. Furthermore, such a proxy should be continuous rather than discrete
without losing its intuitive appeal and empirical relevance. This section outlines a measure
ECONOMIC GROWTH AND POLITICAL REGIMES
85
that endeavors toward these ends. The alternative incorporates the number of effective
political parties in government and the position of the executive vis-à-vis legislative offices.
2.2.1. Determination of the Existence and Number of Effective Parties The number of
“effective” political parties in government constrains policymakers in two respects, within
and without the governing party. Both internal policy discipline and external party competition constrain policymakers. The first obtains if a party exists in government. The second
obtains if competitive elections allow additional parties in government. The fewer parties
in government, the more discretion the regime has in policymaking.
Before one can determine the “effective” number, one must define “political party.”5
This stipulative definition draws from Ranney (1968), Duverger (1954), LaPalombara and
Weiner (1966), Von Der Mehden (1964), and Huntington (1968) and includes three essential elements. First, a party refers to an organized group that describes itself as such and
seeks to control the state. Whoever occupies the executive office in government must be
a member of such a party or the regime is party-less.6 Second, a party must compete in
elections, competitive or otherwise. Elections, even noncompetitive contests, are critical
because such practice indicates that the party attempts to channel or mobilize the polity,
which Huntington (1968) emphasizes in the context of political development. Third, a
party must exhibit organizational continuity. That is, the life span of the party does not
depend on its founders. The party must either continue after the demise of its founders or an
effective change in leadership must occur.7 This consideration measures the relative institutionalization of parties and, especially among authoritarian regimes, distinguishes them
from more traditional political organizations. The stipulative definition applies irrespective
of the number of effective parties in the regime. Also, given the emphasis on economic
policymaking, the definition refers exclusively to the “ ‘party-in-the-government’—persons
holding public legislative and executive offices who sometimes act with solidarity on certain
matters” (Ranney, 1968, p. 154).
Recall that proponents of the authoritarian model suggest that discretion is beneficial. If
ideal parties mobilize or channel political sentiment from the entire polity, then the more embedded party would similarly resist unpopular measures for growth and investment. Thus,
policymakers in one-party dictatorships should enjoy less discretion than their counterparts
in party-less regimes. As Huntington suggests, “Patriot Kings” and “conservative nonroyal
leaders” like Sarit, Ayub Khan, Franco, or Rhee view political parties as divisive because
they challenge authority and complicate unification and modernization. More important,
the bureaucracy that executes economic policy views political parties suspiciously because
they introduce irrational corruption into the pursuit of unproblematic goals, such as growth
(Huntington, 1968, pp. 403–404). Thus, even in an autocratic context, party discipline
constrains dictators and limits their ability to pursue unpopular measures.8 Considering the
general authoritarian view that discretion is beneficial, single-party dictatorships should
grow more slowly than their party-less counterparts. Conversely, assuming the general
democratic view that discretion is malevolent, single-party regimes should grow faster.9
Given the existence of a party, the second step is to determine the number of “effective”
parties in government, which produces subtypes of democracies. Following Laakso and
Taagepera, who do not apply their measure to economic outcomes, the “effective number
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of parties is the number of hypothetical equal-size parties that would have the same total
effect on fractionalization of the system as have the actual parties of unequal size” (Laakso
and Taageper, 1979, p. 4). The effective number N is the inverse of the sum of the squared
fractured seat shares for each party in government.10 That is,
N = Pn
1
l=1
Pl2
,
(1)
where N is the number of effective parties, and Pl represents the share of the total number of
parliamentary seats that the lth party holds. Therefore, if the share of seats is equal among
all parties, then N equals the actual number of parties n. If, in the authoritarian case, one
party competes in a noncompetitive election and seats are distributed accordingly, then N
equals one, the actual number of parties.
2.2.2. Incorporation of the Constitutional Framework With respect to policymaking
discretion, in addition to the raw number of effective legislative parties, the constitutional framework in which those parties exist is very important. Accordingly, the effective
party/constitutional framework proxy modifies Laakso and Taageper’s original formulation
(1) to incorporate the relative position of the legislative vis-à-vis the executive branch, which
is a critical locus of economic policy implementation if not formulation. This modification endeavors to more comprehensively capture governmental discretion. The distinction
isolates “parliamentary” from other categories such as “presidential,” “semipresidential,”
“mixed,” and “authoritarian” regimes.
In Stepan and Skach’s terms, a “pure parliamentary regime” is a system of mutual dependence, where parliamentary majorities must support executive power, and the executive
office can dissolve the legislature and call elections (such as in Italy, Japan, Jamaica, or the
United Kingdom). On the other hand, a “pure presidential regime” is a system of mutual independence, where both the executive and legislative powers have fixed electoral mandates
that are the sole sources of legitimacy (such as in Columbia, Costa Rica, the United States,
or Venezuela) (Stepan and Skach, 1993, pp. 3–4, emphasis added). Similarly, unelected
dictators, who may or may not permit the existence of a multiparty parliament, occupy the
executive branch, and the system exhibits exclusive independence.
In short, the raw number of effective parties captures discretion for parliamentary regimes,
but the figure adjusts for nonparliamentary categories because the executive branch in such
cases typically accommodates only one party. That is, given that “legitimacy” exclusively
derives from the legislature in a parliamentary regime, the raw effective parties measure (1)
is the proxy. But for systems of mutual dependence or exclusive independence the measure
is the mean of the number of parties across the executive and legislative branches, as in
Pn1
N=
l=1
Pl2
+ Pn1
e=1
2
Pe2
,
(2)
where Pe , the number of effective political parties in the executive branch, is equal to one.11
ECONOMIC GROWTH AND POLITICAL REGIMES
2.3.
87
Some Advantages and Disadvantages of the Effective Party/Constitutional
Framework Measure
This section briefly outlines the correlation matrix of alternative measures, notes more
specific examples with respect to Table 1, and discusses the relative appropriateness of outcome versus institutional measures with respect to this econometric issue. In addition to the
useful ordinal distinctions among democracies and dictatorships, which common outcome
alternatives do not produce, the effective party/constitutional framework measure complements common proxies because it more directly relates to the institutional characteristics
of regimes. Such is not to argue that outcome based proxies have no purpose. Rather,
an alternative that focuses more acutely on institutions should more directly address the
debate’s applicable implications.
With respect to the reliability of the measure, the alternative proxy correlates comparatively highly with more common measures. The effective party/constitutional framework
measure correlates closely with both the Polity III (.727) and Gastil (.720) measures, but
not as closely as the Polity III and Gastil indices (.918).12 Turning to examples listed in
Table 1, very few cases diverge considerably in rank. For example, the fifteen countries
with the greatest number of effective parties are all clearly classified as democratic according to both the Gastil and Polity III indices.13 Conversely, the thirty-nine single-party and
party-less regimes (as well as averages in between) are all dictatorships in a dichotomonous
transformation.
With respect to validity, the alternative measure for regime-type is not necessarily a better
proxy for “democracy” in general. As Jaggers and Gurr (1995) clearly suggest, different
measures of regime-type are effective for different research purposes. If the only objective
is to classify regimes, a true measure should include institutions and outcomes, both of
which can be useful. For example, the effective party/constitutional framework measure
is probably not as effective as the Gastil scale at measuring human rights abuses and civil
rights, a distinct scholarly endeavor from explaining growth. “Democracy” is a slippery
concept with several meanings.14
Given this particular econometric question, the effective party/constitutional framework
measure is useful in two aspects. First, continuous expression of the proxy not only maintains its intuitive appeal, unlike the outcome measures, but also makes key distinctions
where the Gastil and Polity III measures do not. For example, with respect to democracies,
the rankings in Table 1 show considerable variation in the effective party/constitutional
framework measure among the most advanced pluralistic democracies, while the Gastil and
Polity III produce identical ordinal values for fourteen (“1”) and twenty-two (“10”) countries, respectively. The outcome measures assign a considerable population of democratic
countries with indistinguishable values, while the alternative institutional measure quantitatively differentiates party systems and presidential and parliamentary democracies.15
In addition to the continuous differentiation of democracies, to distinguish between authoritarian regimes is an important objective because econometric studies exclusively consider
it a residual category. For example, Barro writes that “the theory that determines which kind
of dictatorship will prevail is missing” (1996, p. 2). Similarly, Przeworski and Limongi cite
Sah’s contention that economic performance varies more dramatically among dictatorships
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DURHAM
Table 1. Regime-type measures: Effective party/constitutional framework, Gastil, and Polity III: five-year
average, 1960–1989.a
Country
Belgium
Denmark
Netherlands
Papua New Guinea
Israel
Iceland
Italy
Norway
Sweden
Finland
West Germany
Japan
Switzerland
Ireland
Australia
Thailand
Sir Lanka
Turkey
Canada
Austria
France
Mauritius
United Kingdom
India
Cyprus
Greece
New Zealand
Venezuela
Argentina
Costa Rica
Guatemala
Colombia
South Korea
Jamaica
Ecuador
Bolivia
Trinidad and Tobago
Nicaragua
El Salvador
United States
Brazil
Gambia
Philippines
Dominican Republic
Panama
Effective
Party/
Constitutional
Framework
Measure
4.885
4.734
4.540
4.521
4.133
3.805
3.530
3.347
3.254
3.085
2.997
2.712
2.681
2.609
2.491
2.396
2.372
2.356
2.314
2.258
2.243
2.174
2.105
2.080
2.076
2.025
1.970
1.930
1.738
1.714
1.564
1.533
1.527
1.513
1.497
1.492
1.488
1.481
1.468
1.462
1.447
1.441
1.436
1.417
1.409
a. The Gastil measures begin in 1973.
(Rank)
Gastil
Ordinal
Measure
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
1.000
1.000
1.000
2.000
2.125
1.000
1.375
1.000
1.000
1.750
1.250
1.250
1.000
1.125
1.000
3.000
3.500
2.750
1.000
1.000
1.500
2.375
1.000
2.375
2.125
1.667
1.000
1.750
1.500
1.000
3.000
2.625
5.167
2.125
3.000
3.500
1.750
4.250
3.000
1.000
3.500
2.500
4.000
2.167
5.375
(Rank)
Polity III
Ordinal
Measure
(Rank)
1
1
1
26
27
1
18
1
1
23
16
16
1
15
1
38
42
37
1
1
19
31
1
31
27
22
1
23
19
1
38
35
72
27
38
42
23
55
38
1
42
33
51
30
74
10.000
10.000
10.000
10.000
9.233
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
10.000
−0.600
5.760
8.667
10.000
10.000
7.560
9.400
10.000
8.433
9.400
7.400
10.000
8.400
3.500
10.000
−1.650
7.533
−5.900
10.000
2.680
−1.450
8.300
−6.250
0.900
10.000
−3.000
9.400
0.733
0.400
−3.600
1
1
1
1
26
1
1
1
1
1
1
1
1
1
1
47
35
27
1
1
32
23
1
28
23
34
1
29
38
1
52
33
64
1
39
51
30
70
41
1
54
23
42
44
57
89
ECONOMIC GROWTH AND POLITICAL REGIMES
Table 1. Continued.
Country
Peru
Paraguay
Zimbabwe
Botswana
Guyana
Malaysia
Bangladesh
South Africa
Uruguay
Chile
Sierra Leone
Egypt
Indonesia
Mexico
Portugal
Taiwan
Zambia
Poland
Senegal
Honduras
Singapore
Kenya
Hungary
Liberia
Yugoslavia
USSR
Czechoslovakia
Bulgaria
Sudan
Togo
China
Romania
Mozambique
Cameroon
Congo
Tunisia
Algeria
East Germany
Malawi
Zaire
Spain
Pakistan
Syria
Iraq
Benin
Myanmar
Mali
Ghana
Haiti
Effective
Party/
Constitutional
Framework
Measure
1.398
1.384
1.377
1.369
1.367
1.351
1.346
1.340
1.310
1.300
1.225
1.196
1.150
1.145
1.128
1.126
1.087
1.079
1.071
1.030
1.005
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
1.000
0.989
0.925
0.879
0.755
0.750
0.750
0.667
0.527
0.502
(Rank)
Gastil
Ordinal
Measure
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
67
67
67
67
67
67
67
67
67
67
67
67
67
67
67
67
67
67
86
87
88
89
90
90
92
93
94
3.833
4.625
4.750
2.500
3.750
3.833
4.000
5.500
3.750
4.000
5.000
4.500
5.125
3.750
1.500
4.625
5.125
4.833
4.125
3.500
4.625
5.250
4.833
5.500
5.375
6.250
6.500
7.000
5.500
6.125
6.333
6.667
6.500
5.750
6.500
5.000
5.750
6.500
6.375
6.500
2.667
4.625
6.333
6.833
6.750
6.833
6.333
6.000
6.500
(Rank)
Polity III
Ordinal
Measure
(Rank)
49
57
61
33
46
49
51
76
46
51
65
56
69
46
19
57
69
62
54
42
57
73
62
76
74
87
92
104
76
86
88
99
92
82
92
65
82
92
91
92
36
57
88
101
100
101
88
84
92
2.440
−7.800
0.100
10.000
−3.100
7.867
−5.400
4.000
4.350
−0.900
−4.680
−5.400
−6.880
−4.800
0.400
−7.400
−6.240
−6.067
−3.360
0.500
−2.000
−5.520
−6.200
−6.200
−6.200
−6.520
−6.950
−7.000
−7.000
−7.000
−7.133
−7.400
−7.600
−7.640
−8.000
−8.240
−8.600
−9.000
−9.000
−9.000
−0.720
−0.833
−8.500
−7.100
−6.500
−7.250
−7.000
−5.700
−9.200
40
90
46
1
55
31
60
37
36
50
58
60
73
59
44
85
69
65
56
43
53
62
66
66
66
72
74
75
75
75
83
85
87
89
92
94
97
98
98
98
48
49
96
82
71
84
75
63
101
90
DURHAM
Table 1. Continued.
Country
Rwanda
Niger
Uganda
Nepal
Lesotho
Iran
Central African Republic
Jordan
Kuwait
Bahrain
Swaziland
Effective
Party/
Constitutional
Framework
Measure
0.500
0.333
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
(Rank)
Gastil
Ordinal
Measure
95
96
97
97
97
97
97
97
97
97
97
6.000
6.500
7.000
4.833
5.125
5.500
6.833
5.500
5.000
5.000
5.500
(Rank)
Polity III
Ordinal
Measure
(Rank)
84
92
104
62
69
76
101
76
65
65
76
−7.000
−7.000
−7.000
−7.600
−7.950
−8.100
−8.333
−9.300
−9.600
−10.000
−10.000
75
75
75
87
91
93
95
102
103
104
104
than among democracies, largely because some dictators are constructively “developmentalist,” while others are simply “thieves.” Similar to Barro (1996) and Alesina et al. (1996),
they lament that “we have no theory that would tell us in advance which we are going to
get” (Przeworski and Limongi, 1993, p. 65). By quantitatively distinguishing authoritarian
regimes, this measurement begins to address the lack of testable hypotheses. The effective
party distinction does not purport to truly distinguish benevolent technocratic authoritarian regimes from malevolent kleptocratic despots. But given its crucial link to executive
discretion—party-less regimes enjoy more discretion than single-party dictatorships—the
proxy at least provides an objective hypothesis on which type should outperform, depending
on whether one generally espouses the authoritarian or democratic view of development. If
discretion is benevolent, then party-less dictatorships should grow faster, otherwise, checks
on arbitrary capriciousness in single-party authoritarian regimes should lead to better performance. In short, the effective party/constitutional framework measure makes a first cut
at objective econometric distinctions and therefore testable hypotheses regarding subtypes
of both democracies and dictatorships.
A second advantage regards its more explicit institutional focus. While outcome measures
address a broader conception of democracy and a fuller spectrum of freedoms, an institutional proxy focuses more acutely on regime type characteristics that relate to the origins
of government policymaking and constitutional framing. Whether democracies or dictatorships grow faster is not a purely academic inquiry. The effective party/constitutional framework measure complements common outcome proxies because the former more directly addresses the question, perhaps initially motivated by North and Thomas (1973), as to whether
social scientists can identify objectively measurable institutions that promote growth.
Policy entrepreneurs cannot plausibly construct a polity to instantaneously possess some
value on an ordinal outcome scale. They cannot directly compel such results, but they
can craft procedural institutions.16 With respect to the political parties, the first component,
the alternative measure ultimately relates to the constitutional choice in voting procedures
ECONOMIC GROWTH AND POLITICAL REGIMES
91
among first-past-the-post, proportional representation and various combinations thereof.
Also, some dictators have the option to surround themselves with political party machinery.
Furthermore, with respect to the second component, constitutional frameworks ultimately
refer to serviceable stipulations—actual choices regarding the relationship between the executive and legislative government functions. In short, economists and policy entrepreneurs
alike can supplement outcome proxies with institutional measures that have more concrete
empirical and applicable referents.
2.4.
Hypotheses: Linear and Nonlinear Forms
The continuous nature of the effective party/constitutional framework measure enables tests
of three hypotheses.17 First, the relationship between the number of effective parties and
growth might be linear, which perhaps becomes less intuitive after certain values in the
independent variable. One might question whether there is a monotonic effect of parties on
growth after some threshold. Put differently with respect to specific examples, the (beneficial or deleterious) effect of the 4.1 effective parties in Israel compared to the 2.1 in the United
Kingdom might be less pronounced than the approximately equivalent difference between
the United Kingdom and a party-less regime such as Jordan. Thus, possibility of diminishing marginal positive or negative effects recommends investigating curvilinear functional
forms. Preserving the direction of a given hypothesis, linear-log forms test whether the
effect on economic growth becomes less pronounced or tails off after some democratic (or
discretion) threshold. This form suggests that the most pronounced effect occurs form zero
to one effective party, which might not as accurately reflect this nonlinearity.
In contrast to the linear and linear-log forms, the effect of political regimes might not
be unidirectional. Another curvilinear form evaluates a more balanced view. A concave
quadratic form tests whether the effect on economic growth is positive at an increasing
rate approaching a critical value of effective parties and then tapers increasingly downward.
More substantively, the quadratic form suggests that governing institutions must restrain
sovereigns, compel a credible commitment to property rights, but also restrain them from
wasteful consumption. A certain level of party development or competition ensures commitment, but too many parties make the state vulnerable to demands for consumption.18
One might expect that in terms of the effective party/constitutional framework measure, the
critical maximum might be between one and two parties, which should reflect the existence
of a credible opposition but yet sufficient discretion for unpopular (and presumably ultimately benevolent) measures. Less intuitively but still quite possibly, a critical maximum
between, say, three or four parties would suggest that democracies generally outperform
dictatorships, with the exception of the most fragmented systems.
3.
Additional Econometric Issues: Developmental “Stages” and Simultaneity and/or
Survivor Bias
Before econometric analysis of the effective party/constitutional framework proxy, two
crucial issues that studies fail to address must be outlined. The first regards the possibility
that the efficacy of particular regimes is circumstantial rather than universal, as no study tests
whether dictatorships (democracies) are more efficient in less (more) developed areas. The
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DURHAM
second concerns the misguided critique that studies (Kormendi and Meguire, 1985; Grier
and Tullock, 1989; Barro, 1996) are prone to simultaneity and/or survivor bias. Contrary
to this sweeping criticism (Brunetti, 1997; Przeworski and Limongi, 1993, 1997), given
the routine distinction between the level and rate of economic development, regime type is
exogenous to growth.
3.1.
The “Stages” of Economic Development
The literature fails to test persuasive but implicit notions about the “stages” of development.
Again, a given sovereign must be strong enough to protect property rights and prevent the
anarchical state of nature, yet institutions must also restrain them from abusing monopoly
power for unproductive ends. These paradoxical requirements are important, yet debaters
typically emphasize only one component of this relationship between sovereign and subject
and make universal assertions. But both characteristics might seemingly have organizational advantages under certain circumstances,19 and unfortunately growth econometrics
render no explicit evaluations of possible conditions under which discretion is beneficial.
Drawing on sweeping generalizations of economic history, an historical growth trajectory illustrates more implicit hypotheses about the conditions under which some regimes
are optimal. Consider Kurth’s (1979) outline of industrial phrases and the concomitant
political outcomes. These successive phases include “the production of non-durable consumer goods, intermediate and capital goods, and consumer durables” (Kurth, 1979, p. 319).
Briefly, the first and last stages are complementary for democracy because investment requires “relatively modest” sums of capital in relation both to the available stock and the
large amount required for industrial development (Kurth, 1979, p. 330). Some scholars,
then, Gerschenkron certainly included, instinctively associate the greater amount of capital
required and attendant extensive state intervention during the second phase with authoritarianism.
On the one hand, most agree that today the wealthiest countries are democracies (Przeworski and Limongi, 1993, p. 62). Perhaps consequently, few scholars explicitly argue
that advanced democracies, such as the United States or Japan, would grow faster if they
were authoritarian.20 This largely conforms to Kurth’s suggestion that democracies are
more efficacious in the latest phase. Conversely, even in the paradigmatic case of liberal
nineteenth-century Great Britain, few economic historians argue that the process of heavy
industrial development occurred under truly democratic auspices. Granted, this assertion
depends on one of many possible operationalizations of democracy, but if procedural universal suffrage and full working-class inclusion are indices, then the generalization largely
holds. For example, Schwarz (1992) suggests that OECD countries industrialized under
less than liberal political tutelage, while democratization followed heavy industrial development. Even Moore (1966), who differentiates democratic, fascist, and communist
development, notes that industrialization proceeded universally without subject approval.
He writes, “There is no evidence that the mass of the population anywhere has wanted an
industrial society. . . . At bottom of all forms of industrialization so far have been revolutions
ECONOMIC GROWTH AND POLITICAL REGIMES
93
from above, the work of a ruthless minority” (p. 506). This hardly suggests a democratic
option in the early phases.
On the other hand, few economic historians counterfactually argue that heavy industrial development would have been more efficient under democratic auspices. Even Kurth’s
sweeping trajectory aside, the supposed virtues of democracy seem more relevant in comparatively advanced stages of development. The democratic view largely assumes a modicum
of wealth, existing entrepreneurs, and readily available capital. In more destitute countries,
there are simply fewer enterpreneurs and households with the wherewithal to invest, and the
credible commitment problem is perhaps comparatively less pressing. In poor countries,
one might argue that the shear dearth of capital supersedes the commitment to credible
property rights. After all, the establishment of property rights generally coincides with the
development of property (capital) itself. Put differently, the ratio of unskilled labor to the
total human capital stock decreases with development (national income), which implies that
dictatorships, given their purported advantage in compelling savings from underprivileged
classes, become increasingly ineffective and costly.
This review does not suggest that the literature explicitly conforms to Kurth’s outline, but
neither do scholars evaluate the tacit contention that dictatorship is more efficacious during
heavy industrial development or that democracies better govern advanced states. Critics
and defenders of each regime type talk past one another if one considers (very) long-term
growth and development. Therefore, one might expect that in the universal sample, the effect
of regime type should be ambiguous because the negative effect of discretion in advanced
countries vitiates the positive impact in poorer areas. Such consensus, however implicit,
invites explicit evaluation.
3.2.
Simultaneity Bias, Survival Bias, or Collinearity?
Just as many social scientists argue that political regime type affects economic development,
many others also advance the notion that economic development affects political regime
type. Similar to Brunetti’s (1997) discussion, Przeworski and Limongi’s (1993) conclusion
is that the evidence of simultaneous determination and survival bias between political regime
type and development “suffices to render suspect any study that does not treat regimes as
endogenous.”21 This profound criticism applies to Kormendi and Mequire (1985), Grier
and Tullock (1989), and Barro (1996). But briefly, an important yet routine distinction
between the level and rate of economic development shows that the estimation problem
involves neither simultaneity nor survival bias but collinearity between the initial level of
income and regime type.22
Again, the debate concerns whether regime type determines growth. That is, either dictatorships or democracies exhibit better economic performance. To suggest that economic
development in turn affects regime type necessarily implies that development determines
the manifestation of either democracy or dictatorship. Economic development determines
a particular regime type. Brunetti (1997) as well as Przeworksi and Limongi (1993, 1997)
do not satisfactorily evaluate the distinct (purported) effects of the rate and level of economic development. Whether the rate, level, or both aspects of economic development help
determine political regime type implies different econometric problems and solutions. If
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DURHAM
the level of development determines regime type, a regression that explains growth as some
exogenous function of regime type should control for the initial level of development, which
in turn should exhibit some degree of collinearity with regime type. If growth is jointly
determined with regime type, as the growth rate must help determine regime type not regime
longevity, then the statistical problem is simultaneity bias. That is, growth must specifically
affect democratic or authoritarian outcomes, not the general likelihood of regime survival.
While the econometric section explores this question anew, a brief review of published
results is instructive. Scholars thoroughly document the empirical relationship between the
level of economic development and democracy.23 Theory is less complete,24 but enough
evidence warrants evaluating the relationship between the level of development and regime
type because the vast majority of developed nations are democratic under most definitions.
Levels of development correlate with instances of democracy, a particular regime type.
But no published evidence suggests that the rate of economic development affects regime
type.25 Growth rates do not correlate with manifestations of democracy or dictatorships.26
Perhaps more important, Przeworski et al. (1995) as well as Przeworski and Limongi (1997)
provide no theoretical reason why democracies should be more sensitive than dictatorships
to poor economic performance in the short–run but not to mention the long run. Contrarily,
Bardhan suggests that authoritarian regimes are actually less stable under deteriorating performance because they lack popular legitimacy. He notes the possibility that authoritarian
regimes might survive during periods of sustained economic growth, but when an economy
persistently underperforms, democracies sometimes survive because they possess popular
legitimacy, whereas dictators do not (Bardhan, 1994, p. 237). Empirical referents might
include the “bureaucratic-authoritarian” model in Latin America or Marx’s explanation for
Bonapartism in nineteenth-century France, instances in which economic performance is the
regime’s raison d’être.
4.
Econometric Results
Given the three theoretical addenda, the final issue of possible simultaneity bias in these
data must be addressed before considering the direct effect of regimes on growth and
investment in the total sample, across income breaks to address development stages, and
exclusively within single-party and party-less dictatorships. Each model employs a GLS
random-effects procedure,27 and to ameliorate some validity issues associated with such
(unbalanced) “panel” models the regressions follow Grier and Tullock’s (1989) design with
five-year averaging for the medium-run specifications and dummy variables for continent
and time period to absorb specific spatial and temporal effects, respectively.28
4.1.
Regime Type Measures
Regressions on each democracy proxy, which include many of the factors that Barro (1996),
Przeworski et al. (1995), and Helliwell (1992) employ, statistically support the conclusion
regarding the exogenous nature of political regime type. More formally, the purported
ECONOMIC GROWTH AND POLITICAL REGIMES
95
simultaneous equation system includes
Y1 = β0 + β2 Y2 + β3 Y3 + β4 X + µ
(3)
Y2 = α0 + α1 Y1 + α3 Y3 + α4 Z + ε,
(4)
and
where Y1 is economic growth, Y2 is some measure for political regime type, Y3 is the initial
level of development, X refers to the set of variables that identifies the first equation, and Z is
the set of variables that identifies the second equation. To determine whether a simultaneous
procedure is empirically necessary to estimate Y1 , α1 should be statistically significant. If
not and especially given no persuasive theory as discussed in the previous section, little
recommends substituting the instrumental variables derived in (4) for the actual regime type
measure in (3). If α3 is significant, the coefficient for the initial level of development, then
Y2 and Y3 , the measures of regime type and the initial level of development, respectively,
likely exhibit some degree of collinearity in growth regressions such as (3).
Regressors include the growth rate, the initial level of economic development, male and
female education levels, and factors that identify (4) with respect to (3)—the proportions
of contemporary democracies in the continent of a given country and the rest of the world,
a dummy for British colonial heritage and, in some specifications, lagged values of Y2 .29
The regressions30 include short-, medium-, and long-run averages, which respectively imply
two panels and a pure cross-sectional design. Turning to the results, the coefficient of the
growth rate α1 is not statistically significant in any regression for regime type Y2 , while the
coefficient for the log initial level of development α3 is significant within the 10 percent level
in every pooled but in no cross-sectional regression. This includes alternative regressions
on the Polity III data, the number of effective political parties, and logistic regressions on
the Polity III dummy variable in a pure cross-sectional mode.31 Perhaps more persuasively,
this analysis considers a subset that solely includes the poorest areas, which addresses
the contention in Przeworski et al. (1995) that more destitute democracies are particularly
fragile. But no regression for countries with per capita incomes of less than $2,000 or $1,000
yields a statistically significant coefficient for the growth rate α1 , while the coefficient for
the log initial level of development α3 is significant in all but one regression.32 Again, these
include short-, medium-, and long-run models; alternative considerations of Polity III and
effective party data.
In short, given comparatively consistent significant values for α3 , the results clearly indicate that the level and not the rate of development correlates with regime type. Specifically,
to confirm Lipset’s (1959) hypothesis and Barro’s (1996) more recent findings, both of
which do not control for growth, more developed nations are more likely to exhibit democratic characteristics. This further recommends inclusion of initial per capita incomes in the
neoclassical equations on growth and suggests the possibility of some collinearity, but a simultaneous equation procedure is neither theoretically essential nor empirically necessary,
which contradicts Brunetti (1997) and Przeworski and Limongi (1993, 1997).33 Political
regime type is therefore exogenous to growth.
96
4.2.
DURHAM
Growth and Investment: Total Sample
Given no simultaneity bias, the growth and investment equations extend a neoclassical34
model to include regime type.35 As Levine and Renelt (1992) suggest, with approximately
fifty statistically significant growth regressors reported in the literature, specification bias is
prevalent (p. 943). Indeed, even among carefully specified studies that address this question
such as Kormendi and Meguire (1985), Grier and Tullock (1989), and Barro (1996), there
is no precisely common set of controls. This study follows Levine and Renelt’s four “base”
regressors that economists most commonly include in growth regressions, including the
log initial level of development, the level of investment in physical capital, the level of
investment in human capital (male and female education rates),36 and population growth.
However sensitive or empirically insignificant, two more controversial macroeconomic
variables control for relevant theoretical considerations particularly germane to executive
discretion, including the government ratio and openness to world trade.37 First, “supplyside” theories argue that increased taxes and government spending distort incentives and
reduce the efficiency of capital allocation. Regardless, any government more involved in the
economy, irrespective of regime type, would more likely have an effect on macroeconomic
performance generally and growth specifically, however virtuous. The model must distinguish regime type and the general effects of government intervention.38 Second, classical
liberal economic theorists such as Ricardo advance the virtues of comparative advantage.
More recently, Romer expounds this view with a different emphasis. In contrast to the
conventional focus on “objects,” Romer suggests that international trade creates greater
prosperity through the diffusion of productive ideas into the periphery (1993, p. 546). But
besides the economic rationale, this variable addresses the impact of international influences
on policy choice—exposure to the world economy39 constrains sovereigns and thereby limits their discretion (Gourevitch, 1978).40
Turning to the results, as the total sample regressions in Table 2 indicate, none of the
three alternative functional forms of the effective party/constitutional framework measure
are statistically significant—which generally differs from Kormendi and Meguire (1985),
Grier and Tullock (1989), and Barro (1996). The linear and linear-log forms indicate positive
yet insignificant relationships, and unlike Barro’s finding (1996, p. 14), the quadratic form
is also insignificant and suggests no optimal degree of discretion.
Besides inferences regarding the regime type proxy, the three equations substantiate
enduring neoclassical hypotheses. That is, the evidence generally supports the convergence
hypothesis, the benefits of investment and openness to international trade, and the negative
effects of population growth and government spending. Also, the proxy for male education
rates is positive, and female education rate is negative, consistent with previous findings.
But both human capital measures are insignificant.
As Levine and Renelt (1992) note, scholars commonly advance certain growth determinants that relate more intuitively to investment. Similarly, the argument that dictatorships
grow faster than democracies suggests that authoritarian regimes avoid electoral cycle consumption, which in turn facilitates increases in the physical capital stock. Conversely, the
democratic view argues that entrepreneurs have the incentive to invest under secure property rights. Like the growth equations in Table 2, regressions listed in Table 3 suggest
97
ECONOMIC GROWTH AND POLITICAL REGIMES
Table 2. Growthb regressions: Total sample, GLS random effects models: Medium-run (five-year averages),
1960–1989.
Regression 1
β
Independent Variable
Effective party/constitutional
framework (EP/CF)
Log EP/CF
Square EP/CF
0.043
p value
Regression 2
β
p value
0.774
0.009
Regression 3
β
p value
0.078
0.803
−0.008
0.897
0.828
Log initial GDP
Investment ratio
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for South America
Dummy for Europe
Dummy for Oceania
Intercept
−1.077
0.110
0.173
−0.077
−0.443
0.008
−0.093
−0.814
0.000
0.000
0.383
0.708
0.010
0.042
0.000
0.130
−1.053
0.109
0.170
−0.074
−0.442
0.008
−0.092
−0.835
0.000
0.000
0.401
0.721
0.010
0.040
0.000
0.122
−1.070
0.110
0.172
−0.078
−0.442
0.008
−0.093
−0.821
0.000
0.000
0.386
0.707
0.010
0.043
0.000
0.127
−1.245
−1.797
−1.273
−2.001
10.278
0.047
0.004
0.041
0.061
0.000
−1.273
−1.810
−1.262
−1.991
10.173
0.045
0.004
0.040
0.060
0.000
−1.259
−1.806
−1.275
−2.008
10.210
0.046
0.004
0.040
0.059
0.000
Observations
Cases
Mean time periods per case
450
105
4.286
450
105
4.286
450
105
4.286
R2 within
R2 between
R2 overall
0.359
0.435
0.417
0.359
0.436
0.417
0.359
0.437
0.417
b. The source for all growth calculations is the inital GDP values from the Summers and Heston data set.
that neither the linear, linear-log, nor quadratic forms of the effective party/constitutional
framework measure are statistically significant in the total sample.41
4.3.
Developmental “Stages”
Another econometric objective is to explicitly test hypotheses regarding the levels of development. Indeed, this distinction perhaps directly addresses the dearth of significant findings
in the complete sample. That is, given that political regime type (discretion) does not apparently affect growth or investment universally, the organizational efficiency of dictatorship or
democracy possibly depends on certain circumstances. The malevolent effect of discretion
in rich countries perhaps neutralizes its benevolent impact in more destitute cases, which
produces the ambiguous universal effect reported in Section 4.2.
“Phases” or “stages” of industrialization are slippery concepts, but this inductive exercise
98
DURHAM
Table 3. Investmentc regressions: Total sample, GLS random effects models: Medium-run (five-year
averages), 1960 to 1989.
Regression 4
Independent Variable
β
p value
Regression 5
β
p value
Regression 6
β
EP/CF
Log EP/CF
Square EP/CF
−0.326
Log initial GDP
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for South America
Dummy for Europe
Dummy for Oceania
Intercept
1.936
0.694
0.211
0.736
0.056
−0.096
−4.283
0.009
0.110
0.651
0.019
0.000
0.048
0.005
1.674
0.557
0.328
0.751
0.057
−0.101
−4.519
−3.836
−0.770
5.797
1.304
−5.917
0.032
0.677
0.001
0.679
0.293
−4.227
−1.045
5.355
0.595
−3.771
Observations
Cases
Mean time periods per case
451
105
4.295
451
105
4.295
451
105
4.295
R2 within
R2 between
R2 overall
0.164
0.725
0.622
0.166
0.725
0.622
0.170
0.732
0.630
0.294
0.117
p value
0.753
0.197
−0.242
0.029
0.021
0.204
0.482
0.017
0.000
0.035
0.003
1.844
0.644
0.232
0.747
0.059
−0.097
−4.494
0.012
0.137
0.617
0.017
0.000
0.043
0.003
0.018
0.571
0.002
0.848
0.501
−4.135
−0.972
5.877
1.396
−5.843
0.020
0.595
0.001
0.653
0.295
0.153
c. The source for all investment data is from the Summers and Heston data set.
is to divide the sample across eight percentiles of initial per capita GDP levels.42 That is,
“less developed” samples include countries below the twentieth ($1,114), thirtieth ($1,487),
fortieth ($2,093), and fiftieth ($2,904) percentiles. Conversely, the “developed’ samples
include countries above the eightieth ($7,638), seventieth ($5,463), sixtieth ($3,892), and
fiftieth ($2,904) percentiles. This division of the sample hardly captures subtleties such
as “industrial profiles” or sufficient “backward linkages,” but nonetheless countries above
(below) certain income breaks should be relatively more (less) developed, however complex
the concept. Again, the hypothesis is that discretion is effective in less developed areas but
deleterious in advanced economies with respect to both the allocation and accumulation of
resources.43
The data strongly contradict the view that discretion is more suitable in less developed
areas. According to Table 4 and Table 5, neither linear nor linear-log forms of the effective
party/constitutional framework measure is significant in growth regressions using any less
developed sample break. More problematic for Kurth and the tacit consensus, executive
discretion actually inhibits capital accumulation in poorer areas. For example, the linear-
99
ECONOMIC GROWTH AND POLITICAL REGIMES
Table 4. Growth regressions: Less developed sample (20%, 30%, 40%, and 50% per capita GDP percentiles),
Linear effective party/constitutional framework hypothesis, GLS random effects models: Medium-run (five-year
averages), 1960 to 1989.
Per Capita GDP Level:
Regression 7
<$1,114
Regression 8
<$1,487
β
Regression 9
<$2,093
Independent Variable
β
p value
EP/CF
Log initial GDP
Investment ratio
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Dummy for Oceania
Intercept
−0.223
−0.589
0.190
−0.724
1.588
−0.254
−0.013
−0.040
−1.165
0.662
0.596
0.000
0.083
0.013
0.635
0.327
0.309
0.172
−0.473
0.496
0.172
−0.493
0.655
−0.066
−0.008
−0.085
−1.514
0.196
0.541
0.000
0.122
0.150
0.803
0.468
0.011
0.038
−0.302
0.164
0.144
0.022
0.025
0.007
0.005
−0.086
−1.198
0.390
0.814
0.000
0.945
0.954
0.980
0.549
0.012
0.146
−0.390
0.580
0.131
−0.041
0.047
0.099
0.006
−0.089
−1.588
0.129
0.181
0.000
0.857
0.866
0.650
0.386
0.000
0.004
−2.641
0.083
−2.772
0.009
−1.981
0.057
−2.639
0.000
−3.900
0.088
−2.537
−1.559
0.025
0.380
6.198
0.382
0.722
0.888
−2.659
−1.422
−2.074
0.881
0.012
0.365
0.437
0.856
−2.889
−1.296
−2.097
−1.660
0.000
0.182
0.307
0.584
p value
β
Regression 10
<$2,904
p value
β
Observations
Cases
Mean time periods
per case
88
31
134
46
179
59
224
70
2.839
2.913
3.034
3.200
R2 within
R2 between
R2 overall
0.304
0.881
0.591
0.268
0.586
0.500
0.308
0.445
0.431
0.308
0.638
0.471
p value
log form equations for the twentieth, thirtieth, and fiftieth percentiles (Regressions 19, 20,
and 22 in Table 7) suggest that increases in the number of effective parties increases the
investment ratio at a decreasing rate in less developed countries. Furthermore, while the
linear form is insignificant in the more affluent remaining breaks, the twentieth percentile
(under $1,114) equation, Regression 15 in Table 6, indicates a significantly positive linear
effect. In short, however robust these unexpected results, the data clearly reject the view
that dictatorship is more suitable for poorer economies.
With respect to advanced countries, the data render some support for the trajectory hypothesis. For example, the linear-log form is consistently significant in growth regressions
for the three highest percentiles (Regressions 27, 28, and 29 in Table 9), which suggests
a positive impact on expansion in more advanced economies. Less compelling, the linear
form is also positive and significant, albeit within the 10 percent confidence interval, in
samples above the seventieth and sixtieth income percentiles (Regressions 24 and 25). But
interestingly, discretion only seems to inhibit resource allocation but not accumulation in
advanced areas. The coefficients for the linear and linear-log forms are insignificant in
100
DURHAM
Table 5. Growth regressions: Less developed sample (20%, 30%, 40%, and 50% per capita GDP percentiles),
Linear-log effective party/constitutional framework hypothesis, GLS random effects models: Medium-run (fiveyear averages), 1960 to 1989.
Per Capita GDP Level:
Regression 11
<$1,114
Regression 12
<$1,487
β
Regression 13
<$2,093
Independent Variable
β
p value
EP/CF
Log initial GDP
Investment ratio
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Dummy for Oceania
Intercept
0.021
−0.681
0.178
−0.830
1.763
−0.272
−0.012
−0.036
−1.184
0.784
0.537
0.001
0.048
0.006
0.612
0.340
0.361
0.170
−0.037
0.313
0.175
−0.529
0.664
−0.112
−0.009
−0.085
−1.344
0.560
0.693
0.000
0.104
0.158
0.671
0.424
0.013
0.076
−0.027
0.311
0.146
0.028
−0.005
0.122
0.007
−0.077
−1.415
0.662
0.649
0.000
0.930
0.990
0.636
0.409
0.022
0.085
−0.056
0.502
0.134
−0.018
0.011
0.086
0.006
−0.090
−1.435
0.266
0.246
0.000
0.938
0.968
0.695
0.379
0.000
0.011
−2.721
0.077
−2.589
0.018
−2.176
0.035
−2.509
0.000
−3.954
0.085
−2.578
−1.333
0.027
0.463
6.735
0.343
1.468
0.783
−2.849
−1.148
−3.395
−0.958
0.006
0.435
0.145
0.842
−2.829
−1.242
−3.171
−1.713
0.000
0.203
0.090
0.578
p value
β
Regression 14
<$2,904
p value
β
Observations
Cases
Mean time periods
per case
88
31
134
46
181
60
224
70
2.839
2.913
3.017
3.200
R2 within
R2 between
R2 overall
0.304
0.886
0.591
0.269
0.574
0.493
0.293
0.488
0.435
0.308
0.632
0.468
p value
every investment equation for developed samples, with the exception of the linear form in
the third highest percentile (above $3,892, Regression 33), which is unexpectedly negative.
4.4.
Growth and Investment in Dictatorships
Again, the preceeding discussion suggests that the effective party/constitutional framework
measure quantitatively distinguishes different authoritarian regimes. To extend Jowitt’s and
Huntington’s arguments about corruptive tendencies in political parties, the testable hypothesis, under the general authoritarian perspective, is that party-less dictatorships promote
growth and investment more effectively than single-party regimes. Conversely, according
to the broad democratic view, single-party regimes should be more effective than party-less
despots. Turning to the results, with respect to allocation, Regression 39 in Table 12 suggests
that single-party regimes had slightly higher growth rates, but the figure is insignificant.
But regarding capital accumulation, single-party regimes had investment ratios on average
101
ECONOMIC GROWTH AND POLITICAL REGIMES
Table 6. Investment regressions: Less developed sample (20%, 30%, 40%, and 50% per capita GDP percentiles),
Linear effective party/constitutional framework hypothesis, GLS random effects models: Medium-run (five-year
averages), 1960 to 1989.
Per Capita GDP Level:
Regression 15
<$1,114
Regression 16
<$1,487
β
Regression 17
<$2,093
Independent Variable
β
p value
EP/CF
Log initial GDP
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Dummy for Oceania
Intercept
2.344
2.750
0.298
−0.716
−2.510
0.195
−0.050
−7.301
0.011
0.260
0.795
0.710
0.022
0.000
0.535
0.011
1.293
2.226
−0.430
0.269
−0.362
0.124
−0.080
−4.711
0.129
0.288
0.608
0.835
0.485
0.000
0.335
0.066
0.105
3.188
−0.156
1.836
−0.112
0.068
−0.072
−1.740
0.869
0.026
0.814
0.037
0.807
0.000
0.274
0.365
0.452
2.934
0.085
1.085
0.006
0.062
−0.115
−2.633
0.399
0.011
0.887
0.132
0.989
0.000
0.048
0.110
−8.516
0.075
−5.149
0.166
−4.265
0.080
−3.553
0.089
13.341
0.068
0.860
17.558
0.826
0.009
−7.725
0.620
−6.864
0.615
0.050
8.597
0.400
−15.078
0.984
0.012
0.946
0.134
0.302
7.890
−0.837
−12.194
0.889
0.002
0.877
0.129
p value
β
Regression 18
<$2,904
p value
β
Observations
Cases
Mean time periods
per case
88
31
134
46
179
59
224
70
2.839
2.913
3.034
3.200
R2 within
R2 between
R2 overall
0.617
0.469
0.414
0.321
0.396
0.349
0.257
0.548
0.414
0.221
0.645
0.479
p value
and ceteris paribus about three percentage points greater than their party-less counterparts
during the period, which is significant at the 5 percent level according to Regression 40.
This contradicts Jowitt’s and Huntington’s views based on more qualitative evidence, and
the results suggest, in support of the general democratic view, that greater discretion within
dictatorships enhances investment.44 A plausible interpretation is that institutionalized parties on average restrain capricious autocrats and thereby create a more suitable investment
environment.
5.
Conclusions
In summary, a crucial shortcoming in the debate on regimes and growth concerns the dearth
of continuous measures that focus on institutions rather than outcomes. While not necessarily a superior proxy for all econometric applications, the institutional focus of the
effective party/constitutional framework measure more directly addresses the serviceable
implications of this particular debate. Also, two additional problems beset previous studies.
First, the literature ignores the possibility that the effectiveness of particular regime types
102
DURHAM
Table 7. Investment regressions: Less developed sample (20%, 30%, 40%, and 50% per capita GDP percentiles),
Linear-log effective party/constitutional framework hypothesis, GLS random effects models: Medium-run (fiveyear averages), 1960 to 1989.
Per Capita GDP Level:
Regression 19
<$1,114
Regression 20
<$1,487
β
Regression 21
<$2,093
Independent Variable
β
p value
EP/CF
Log initial GDP
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Dummy for Oceania
Intercept
0.287
2.884
0.448
−0.817
−2.237
0.195
−0.048
−7.780
0.022
0.245
0.697
0.671
0.045
0.000
0.562
0.006
0.263
2.001
−0.408
0.222
0.295
0.131
−0.074
−5.487
0.037
0.333
0.623
0.862
0.563
0.000
0.368
0.031
0.150
2.981
−0.268
1.857
−0.115
0.069
−0.068
−2.156
0.187
0.036
0.685
0.033
0.801
0.000
0.297
0.264
0.198
2.860
−0.030
1.124
0.028
0.064
−0.109
−3.054
0.065
0.012
0.960
0.116
0.948
0.000
0.058
0.064
−8.870
0.059
−5.648
0.123
−4.570
0.058
−3.928
0.059
12.687
0.078
0.858
16.875
0.824
0.011
−6.886
0.668
−3.896
0.776
−0.046
8.827
−0.065
−12.926
0.985
0.010
0.990
0.201
0.247
8.006
−0.312
−10.663
0.908
0.002
0.951
0.184
p value
β
Regression 22
<$2,904
p value
β
Observations
Cases
Mean time periods
per case
88
31
134
46
179
59
224
70
2.839
2.913
3.034
3.200
R2 within
R2 between
R2 overall
0.602
0.474
0.419
0.324
0.417
0.371
0.261
0.558
0.422
0.226
0.654
0.488
p value
depends on certain circumstances—namely, the level of economic development, which perhaps helps explain ambiguous findings in universal samples. Second, these data contradict
the notion that regimes and growth are jointly determined (Brunetti, 1997; Przeworski and
Limongi, 1993, 1997), as the level rather than the rate of development affects regimes.
Therefore, Kormendi and Meguire (1985), Grier and Tullock (1989), Barro (1996), and this
article correctly consider regime type exogenous to growth.
Given these addenda, the total sample renders no empirical regularities between any
functional form of the number of effective political parties and growth or investment in the
total sample. But this does not necessarily suggest that political regime type does not affect
performance. Division of the sample across eight per capita income breaks to inductively
proxy “stages” of development produces some significant results. As expected, the linearlog form suggests that discretion negatively affects growth in developed countries. But
in direct contrast to Kurth’s hypothesis, some evidence indicates that discretion actually
lowers investment in poorer areas. Also, given substantively meaningful authoritarian
subtypes, hitherto an econometric residual category, single-party dictatorships have greater
investment ratios compared to party-less regimes.
103
ECONOMIC GROWTH AND POLITICAL REGIMES
Table 8. Growth regressions: Developed sample (80%, 70%, 60%, and 50% per capita GDP percentiles),
Linear effective party/constitutional framework hypothesis, GLS random effects models: Medium-run (five-year
averages), 1960 to 1989.
Per Capita GDP Level:
Regression 23
<$7,638
Regression 24
<$5,463
β
Regression 25
<$3,892
Independent Variable
β
p value
EP/CF
Log initial GDP
Investment ratio
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Dummy for Oceania
Intercept
0.156
−6.040
0.161
0.677
−0.495
−0.906
0.000
−0.019
0.490
0.001
0.001
0.229
0.339
0.033
0.949
0.758
0.376
−2.327
0.134
0.351
−0.052
−0.914
0.010
−0.093
0.052
0.008
0.002
0.394
0.894
0.016
0.032
0.059
0.327
−1.908
0.083
0.244
−0.281
−1.341
0.009
−0.042
0.433
0.087
0.004
0.024
0.454
0.363
0.000
0.042
0.325
0.808
0.246
−1.722
0.079
0.403
−0.365
−1.190
0.007
−0.079
−1.241
0.165
0.001
0.021
0.171
0.202
0.000
0.131
0.035
0.227
2.746
0.034
0.681
0.185
0.151
0.884
−1.087
0.216
0.849
0.795
0.656
52.617
0.675
0.463
0.606
0.001
1.206
0.279
0.062
17.722
0.466
0.779
0.963
0.029
−1.531
−1.612
−0.586
19.005
0.164
0.050
0.610
0.001
−1.928
−1.993
−1.505
17.799
0.037
0.009
0.199
0.000
p value
β
Regression 26
<$2,904
p value
β
Observations
Cases
Mean time periods
per case
90
24
135
33
180
46
225
58
3.750
4.091
3.913
3.879
R2 within
R2 between
R2 overall
0.387
0.902
0.570
0.402
0.842
0.578
0.345
0.728
0.463
0.364
0.659
0.484
p value
However robust the correlations, inference is a separate endeavor. For example, what
single-party dictatorships do, more exactly, with respect to macroeconomic policy that
produces higher investment ratios but not growth rates is ambiguous. Also, what democratic
governments in more affluent countries are restrained from doing, which increases allocation
but not accumulation efficiency, is unclear. In general, these regressions—and those in
Kormendi and Meguire (1985), Grier and Tullock (1989), and Barro (1996), for that matter—
do not preclude some connection between regime type and monetary or fiscal policy that, in
turn, profoundly affects performance.45 More limited time-series analysis or perhaps case
studies, as Fischer recommends (1991, pp. 37–38), might better approximate the possible
interaction between regime type and particular policy choices.
Acknowledgments
The author thanks, without implication, Richard R. Nelson, Douglas A. Chalmers,
Robert Y. Shapiro, Brendan O’Flaherty, Alessandra Casella, Lauren Paige Kennedy, an
104
DURHAM
Table 9. Growth regressions: Developed sample (80%, 70%, 60%, and 50% per capita GDP percentiles),
Linear-log effective party/constitutional framework hypothesis, GLS random effects models: Medium-run
(five-year averages), 1960 to 1989.
Per capita GDP Level:
Regression 27
>$7,638
Regression 28
>$5,463
Regression 29
>$3,892
Regression 30
>$2,904
Independent Variable
β
p value
β
p value
β
p value
β
p value
Log EP/CF
Log initial GDP
Investment ratio
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Dummy for Oceania
Intercept
0.646
−3.137
0.146
0.017
−0.002
−0.148
0.001
0.006
0.000
0.026
0.000
0.967
0.996
0.735
0.896
0.887
0.216
−1.861
0.115
0.301
0.032
−0.684
0.011
−0.102
0.090
0.028
0.009
0.468
0.934
0.112
0.021
0.047
0.194
−1.515
0.077
0.147
−0.183
−1.235
0.009
−0.041
0.531
0.049
0.009
0.029
0.653
0.554
0.000
0.037
0.326
0.760
0.069
−1.425
0.076
0.386
−0.355
−1.187
0.007
−0.065
−1.258
0.317
0.003
0.022
0.183
0.206
0.000
0.108
0.067
0.202
1.386
0.139
1.017
0.434
−0.368
0.712
−1.277
0.132
−2.065
0.190
−0.155
27.144
0.267
0.809
0.853
0.032
0.467
0.455
−0.425
14.440
0.793
0.645
0.757
0.068
−1.752
−1.586
−0.976
16.322
0.105
0.045
0.376
0.002
−1.949
−1.983
−1.695
15.647
0.027
0.005
0.119
0.000
Observations
Cases
Mean time periods
per case
90
24
135
33
180
46
225
58
3.750
4.091
3.913
3.879
R2 within
R2 between
R2 overall
0.387
0.963
0.641
0.400
0.831
0.581
0.337
0.761
0.468
0.355
0.670
0.483
anonymous referee, and an associate editor for helpful comments and suggestions regarding this project.
Notes
1. More recently, he suggests that “it is naı̈ve to suppose that one of these types of political systems (regimes)
will regularly have better economic performance than the other.” New or “transitory” democracies, which
might abandon property rights to win elections, are a particular exception to Olson’s benevolent view (Clague
et al., 1996, pp. 243–245).
2. This democratic view has strong normative appeal because there is no dilemma between liberty and wealth
(Pourgerami, 1991, p. 201). In Bhagwati’s estimation, “all goods things may sometimes go together” (Bhagwati, 1995, p. 50, emphasis added). Of course, one need not actually posit the superior economy efficiency of
democracy to be optimistic. To posit no difference between regimes is normatively preferable—democracy
should attend economic growth simply because autocracy provides no intrinsic advantage.
3. Jaggers and Gurr review Arat, Bollen, Coppedge and Reinicke, the Gastil Freedom House annual, Gasiorowski,
and Vanhanen (Jaggers and Gurr, 1995, pp. 473–476).
4. Brunetti also suggests that this “dominating measure” is “rather subjective” (1997, p. 166).
105
ECONOMIC GROWTH AND POLITICAL REGIMES
Table 10. Investment regressions: Developed sample (80%, 70%, 60%, and 50% per capita GDP percentiles),
Linear effective party/constitutional framework hypothesis, GLS random effects models: Medium-run (five-year
averages), 1960 to 1989.
Per capita GDP Level:
Regression 31
>$7,638
Regression 32
>$5,463
Regression 33
>$3,892
Regression 34
>$2,904
Independent Variable
β
p value
β
p value
β
p value
β
p value
EP/CF
Log initial GDP
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Dummy for Oceania
Intercept
−0.326
−0.720
1.364
−0.189
1.571
0.010
−0.645
0.497
0.801
0.230
0.868
0.051
0.647
0.000
−0.358
−3.395
0.153
0.862
3.529
0.012
−0.252
0.379
0.088
0.859
0.309
0.000
0.458
0.047
−0.968
0.628
0.282
0.778
2.704
0.045
0.070
−9.094
0.026
0.699
0.675
0.257
0.000
0.003
0.521
0.131
−0.471
−0.417
1.269
−0.125
2.374
0.023
−0.115
−6.228
0.235
0.748
0.038
0.842
0.000
0.086
0.198
0.050
−12.839
0.012
−9.853
0.017
−2.994
0.431
−4.558
0.103
−15.001
−3.067
−8.896
34.061
0.040
0.463
0.124
0.229
−13.471
2.017
−4.047
49.140
0.027
0.555
0.420
0.010
−2.586
8.441
1.873
0.948
0.493
0.004
0.703
0.947
−3.665
6.423
0.166
13.731
0.204
0.006
0.970
0.230
Observations
Cases
Mean time periods
per case
91
24
136
33
181
46
226
58
3.792
4.121
3.935
3.897
R2 within
R2 between
R2 overall
0.669
0.467
0.459
0.572
0.415
0.416
0.413
0.475
0.363
0.303
0.553
0.489
5. For a variety of definitions see Ranney (1968, pp. 143–146).
6. This generally refers to regimes in which a ruling despot, often a monarch, coexists with an elected legislature.
7. LaPalombara and Weiner (1996, p. 6) and Huntington (1968, p. 409) stress this notion.
8. In point of fact, single-party mobilization for development, as under Stalin and Mao, frequently attends
extensive party purges. Gerschenkron’s discussion of industrial development under Stalin, one of his exemplars
of dictatorial response to economic backwardness, notes Stalin’s suppression of the Communist Party. Jowitt
similarly argues that Stalin’s personal rule from 1934 through 1953 threatened the Communist Party as the
primary source of charisma (1992, p. 9).
9. Jowitt makes a trajectory argument about the origins of corruption in Marxist-Leninist regimes, by far the
most influential exemplar of single-party rule. Briefly, following Weber’s notion of “routinization,” charisma
is difficult to sustain as a source of legitimacy, and procedure and routine must ultimately justify rule. The
distinction between revolutionary tasks for the party and the security and status of its elite becomes less clear
over time, which leads to corruption.
10. Several sources of data are available to compute the number of effective parties. See the Chronicle of Parliamentary Elections and Developments, Inter-Parliamentary Union, Vols. 2–27 (1967–1993): The Political
Handbook of the World (various issues); and Machie and Rose (1991).
11. Values are undefined for cases that experience a regime change or a civil war according to the Polity III data
set during a five-year averaging period. To some degree, then, regressions that include this measure account
for political instability.
106
DURHAM
Table 11. Investment regressions: Developed sample (80%, 70%, 60%, and 50% per capita GDP percentiles),
Linear-log effective party/constitutional framework hypothesis, GLS random effects models: Medium-run (fiveyear averages), 1960 to 1989.
Per capita GDP Level:
Regression 35
>$7,638
Regression 36
>$5,463
Regression 37
>$3,892
Regression 38
>$2,904
Independent Variable
β
p value
β
p value
β
p value
β
p value
Log EP/CF
Log initial GDP
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Dummy for Oceania
Intercept
−0.199
−0.882
1.420
−0.222
1.467
0.008
−0.665
0.739
0.758
0.223
0.847
0.095
0.693
0.000
0.216
−3.964
0.175
0.855
3.719
0.008
−0.322
0.346
0.036
0.840
0.311
0.000
0.620
0.009
−0.216
−0.359
0.321
0.770
2.712
0.043
0.045
−9.857
0.256
0.820
0.643
0.274
0.000
0.005
0.681
0.106
0.001
−0.893
1.138
0.006
2.409
0.022
−0.126
−6.497
0.994
0.478
0.070
0.993
0.000
0.092
0.156
0.041
−12.588
0.017
−11.287
0.005
−2.702
0.489
−4.877
0.086
−14.622
−3.252
−8.803
35.058
0.058
0.451
0.134
0.217
−15.463
0.455
−5.627
55.788
0.009
0.889
0.248
0.002
−3.013
7.805
1.746
8.412
0.433
0.008
0.727
0.546
−4.213
5.877
−0.123
17.656
0.147
0.012
0.978
0.117
Observations
Cases
Mean time periods
per case
91
24
136
33
181
46
226
58
3.792
4.121
3.935
3.897
R2 within
R2 between
R2 overall
0.669
0.454
0.447
0.565
0.446
0.447
0.400
0.462
0.357
0.297
0.551
0.488
12. The raw number of effective parties in the legislature correlates quite closely with the effective party/
constitutional framework proxy (.944).
13. Furthermore, twenty-eight of the top thirty cases are democratic according to the Polity III dummy transformation. However incompatible the temporal coverage, twenty-seven of the top thirty countries qualify as
democracies using the Gastil measures.
14. For a useful description, see Held (1996).
15. Brief reference to the United States, a “presidential” regime, helps illustrates how the effective party/
constitutional framework measure differentiates democracies. With respect to Congress, the United States
is a two-party system, but only one party captures the presidency. Given equal weights regarding the legislative and executive functions of government in the process of economic policymaking, the weighted average
number of effective political parties in the United States is approximately 1.5.
16. While never drafted directly into a given constitution, electoral laws have considerable impact on the number
of effective parties. For example, in their purest manifestations, the first-past-the-post system tends to exclude
smaller parties, and proportional representation leads to a proliferation in parties. The second component of the
alternative measure, regarding the relative sovereignty of the executive and legislative government branches, is
more directly related to constitutional stipulations. As reforms in Eastern Europe after the cold war illustrate,
politicians make distinct choices between different constitutional frameworks.
17. Durham (1998a) discusses the three alternative functional forms.
18. Barro, who uses the Gastil indices, finds support for this functional form (1996, p. 14).
107
ECONOMIC GROWTH AND POLITICAL REGIMES
Table 12. Single-party and party-less dictatorships,d GLS random effects
models for growth and investment, 1960 to 1989.
Growth
Regression 39
Investment Ratio
Regression 40
Independent Variable
β
p value
β
EP/CF
Investment ratio
Log initial GDP
Male education rate
Female education rate
Population growth
Openness to trade
Government ratio
Dummy for Africa
Dummy for Central
and North America
Dummy for
South America
Dummy for Europe
Intercept
1.054
0.101
−1.297
−0.202
0.039
−0.145
0.015
−0.028
−2.174
0.127
0.045
0.013
0.535
0.916
0.582
0.040
0.466
0.018
2.803
0.022
1.762
0.467
−0.248
0.118
0.075
−0.082
−5.031
0.101
0.431
0.737
0.757
0.000
0.248
0.013
−1.772
0.282
−0.620
0.855
1.147
0.887
9.149
0.438
0.579
0.020
4.678
12.488
−4.395
0.128
0.000
0.590
Observations
Cases
Mean time periods per case
151
55
2.745
152
55
2.764
R2 within
R2 between
R2 overall
0.364
0.523
0.463
0.263
0.812
0.753
p value
d. Party-less dictatorships that inform the regression estimates include
Bahrain (1980–1984), Benin (1970–1974), Bolivia (1970–1974), the Central African Republic (1970–1984), Chile (1975–1989), Ecuador (1965–
1974), Ghana (1985–1989), Haiti (1965–1969), Honduras (1975–1979),
Indonesia (1965–1969), Iran (1960–1964, 1985–1989), Iraq (1960–
1964), Jordan (1960–1989), Kuwait (1985–1989), Lesotho (1970–1989),
Mali (1970–1974), Myanmar (1965–1969), Nepal (1965–1985), Niger
(1975–1984), Pakistan (1960–1964, 1980–1984), Peru (1970–1974), Portugal (1960–1969), Rwanda (1975–1979), Spain (1960–1974), Swaziland
(1975–1989), Syria (1965–1969), Thailand (1960–1964), Uganda (1970–
1974), and Uruguay (1975–1979). Single-party authoritarian regimes
include Algeria (1965–1989), Benin (1975–1989), Bulgaria (1985–
1989), Cameroon (1965–1989), China (1975–1989), Congo (1980–
1989), Czechoslovakia (1970–1989), East Germany (1975–1984), Hungary (1975–1989), Iraq (1970–1979), Kenya (1965–1989), Liberia (1965–
1984), Malawi (1970–1989), Mali (1980–1989), Mozambique (1980–
1989), Myanmar (1975–1989), Niger (1965–1969), Panama (1970–
1979), Poland (1975–1984), Romania (1965–1984), Rwanda (1985–
1989), Senegal (1965–1974), Sierra Leone (1980–1989), Singapore
(1965–1979), Sudan (1975–1984), Taiwan (1960–1969), Togo (1970–
1989), Tunisia (1965–1989), USSR (1965–1989), Yugoslavia (1965–
1989), Zaire (1965–1989), and Zambia (1975–1989).
108
DURHAM
19. This resembles the more explicit “life-cycle” explanations of vertical and horizontal firm integration in neoinstitutionalist economics (see Williamson, 1985, p. 90). Similar to this debate, the former is purportedly more
appropriate for early product phases, while the latter is supposedly better suited for advanced stages.
20. Some exceptions might include the popular advocacy of “autonomous” central banks, which purportedly must
be insulated from political and popular pressures. But while this view generally advocates discretion, few
commentators advocate complete authoritarian rule.
21. With the exception of Helliwell (1992), none of the econometric growth models that include some measure of
political regime type use simultaneous equation methods to account for such purported bias.
22. Przeworski and Limongi fail to make this crucial distinction and write, “If democratic regimes are more likely
to occur at a higher level of development . . . then regimes are endogenously selected” (1993, p. 62, emphasis
added). This is mistaken. Levels of development, an independent (exogenous) variable in neoclassical growth
regressions, are quite different from growth rates, the dependent (endogenous) variable, as economists and
other social scientists routinely distinguish in growth models. Przeworski et al. (1995) similarly fail to make
the distinction.
23. For recent examples, see Londregan and Poole (1996), Przeworski and LImongi (1997, p. 169), and Barro
(1996, p. 16).
24. As Przeworski and Limongi succinctly summarize the causal process, “a story told about country after country
is that after they develop, social structures become complex, labor processes begin to require the active
cooperation of employees, and new groups emerge and organize . . . the system can no longer be run by
command” (1997, p. 157).
25. Londregan and Poole’s analysis of “the coup trap” is instructive. Briefly, they find that “the probability that a
government is overthrown by a coup d’etat is substantially influenced” by both the rate and level of economic
development in both dictatorships and democracies, as underdevelopment and poor performance threaten
tenure (Londregan and Poole, 1990, p. 177, emphasis added). Brunetti makes a similar claim about general
not particular regime longevity and short-run economic performance (Brunetti, 1997, p. 165), and Alesina et
al. (1996) illustrate the vulnerabilities of both democracies and dictatorships to economic stagnation (p. 191).
26. Przeworski et al. (1995) and Przeworski and Limongi (1997) publish no compelling evidence that democracies
are more sensitive than dictatorships to poor economic performance. Przeworski suggests that a expected
life of a “declining democracy” is eighteen years compared to forty-one years for a “declining dictatorship”
(1995, p. 19). But this finding is due to peculiar coding on the dependent variable. Przeworski and Limongi
(1997) readily admit this calculation does not include dictatorships that experience transitions to dictatorships.
They explicitly write that “we do not distinguish successive dictatorships . . . even if ayatollahs succeed a shah,
we treat it as one continuous spell of dictatorship” (1997, p. 160 n.). Therefore, Przeworski (1994, 1995),
Przeworski et al. (1995), and Przeworski and Limongi (1997) do not consider coups within a given “continuous
spell of military regimes” the end of a regime, as they simply code away the authoritarian vulnerability to
economic decline within such “spells.” This evidence does not evaluate the appropriate “survival bias” question
of whether the democratic or authoritarian nature of a particular regime makes it more susceptible to a coup,
revolution, or some other form of termination under (equally) poor economic performance.
27. Individual short-run time series equations for each country are also instructive, with particular respect to the
suspect validity of pooling across a disparate data set. For example, the definition of “effective” party is more
consistent within a given country rather than across cases (Durham, 1998a).
28. Time-specific coefficients are available on request.
29. The proxies for Y2 and respective lagged values include the twenty-one-point ordinal Polity III scale, a related
dummy variable for “coherent” democracy and the effective party/constitutional framework measure. Turning
to the Z set, the international considerations of the number of democracies inside and outside a given continent
from 1960 to 1989 are defined according to Stepan and Skach (1993) and the Polity III data set. Initial levels
of development and growth rates are from the Penn World Table 5.6. Barro and Lee’s updated data set on
average years of schooling for the population over twenty-five proxies male and female education levels from
Barro and Lee (1993). Past and contemporary membership in the Commonwealth defines the British colonial
dummy from the Political Handboook of the World (1992, pp. 909–910).
30. The regressions on regime type proxies are available on request.
31. The sensitivity analysis in Durham (1998a) also includes alternative specifications that include or exclude the
log and level of development and the education rate.
32. These models, which follow the sample division in Przeworski et al. (1995), are also available on request.
ECONOMIC GROWTH AND POLITICAL REGIMES
109
33. The simple correlation statistic between the effective party/constitutional framework measure and the initial
log GDP per capita is 0.572.
34. The following uses this term somewhat loosely. “Neoclassical” equations include variables, such as investment
in human capital and openness to international trade, more commonly associated with “new” or “endogenous”
growth theory.
35. Brunetti similarly notes that investigations of political regime type are particularly underspecified with respect
to common macroeconomic determinants (1997, p. 165).
36. Barro and Sala-i-Martin (1995), Barro (1996), and Perotti (1996) report separate coefficients for male and
female education rates. The theoretical justification for differentiating by sex is that “the gap . . . is an indicator
of an economy’s backwardness and that greater backwardness induces a higher growth rate through the familiar
convergence mechanism” (Barro, 1996, p. 6).
37. The source for these data is Summers and Heston’s Penn World Table 5.6, except education rates, which follow
Barro and Lee (1993). See Fischer for some discussion of the validity of the data set (1993, p. 495). For a
similar discussion of government spending and trade see Durham (1998a, 1998b).
38. Following national income accounts, government consumption of GDP is the measure. This proxy unfortunately does not distinguish infrastructure investment from regulation.
39. Exports and imports as a fraction of GDP from the Summers and Heston data set measures the concept.
40. For example, Katzenstein (1985) suggests that economies of scale and their position in the international economy forced smaller advanced European states to pursue export-oriented strategies, as international influences
stimulated consensus and restraint between labor and capital domestically.
41. Collinearity between the effective party/constitutional framework measure and the initial level of development
affects few results. Regressions for each specification that do not control for “convergence” produce the same
results save two equations. The log number of effective parties is positively significant at the 10 percent level
in total sample investment equation (Regression 5), and the quadratic form of the number of effective parties
is significant at the 10 percent level in the total sample investment equation (Regression 6). These results are
available on request.
42. As the preceding section on the supposed endogenous selection between political regime type and growth
suggests, more advanced countries are generally more “democratic.” For example, among the sample of
countries above the mean per capita GDP of $4,315, the effective party/constitutional framework mean is 2.4,
and the raw effective party mean is 2.5. Also, 74 percent of this sample qualify as “coherent” democracies
according to the Polity III scale. Conversely, countries below the mean are more “authoritarian,” with an
effective party/constitutional framework mean of 1.1 and raw effective political party mean of 1.3. Only 17
percent of this sample qualify as democratic.
43. Given the unidirectional nature of the hypothesis, the following does not consider the quadratic form.
44. Party-less regimes represent a disparate performance category, with a higher pooled standard deviation of
growth, 3.9 percent, compared to single-party regimes, 3.5 percent, from 1960 to 1989. But both subtypes
of dictatorships exhibit greater volatility than multiparty systems, which show a pooled standard deviation of
growth of approximately 2.7 percent during the period.
45. Similarly, Helliwell concludes that there is an understudied link between regime type and policymaking (1992,
p. 23).
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