Democracy, Governance, and Economic Performance: Theory and Evidence

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MIT Press, 2003 - 383 pages
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In this book, Yi Feng combines political and economic analyses to study the effects of political institutions on economic performance. Traditionally, political scientists disregard details of economic conditions, while economists may not take into consideration a systematic explanation of political regimes. The growing interest in the interplay of political and economic systems, spurred by the political democratization and economic liberalization evident in many countries over the last twenty years, merits this new perspective.

The book examines the political determinants of economic growth, and, specifically, the controversial question of the relationship between democracy and quality of life. Feng systematically studies three variables of a political system--political freedom, political stability, and policy certainty--and relates them to economic development. He examines the political factors that may affect patterns of growth directly or indirectly.

Combining theory and country-specific case studies, Democracy, Governance, and Economic Performance demonstrates that political institutions and conditions do matter in economic growth. After establishing a theoretical foundation, Feng tests it by examining the direct effects of the three key political variables on economic growth and the indirect effects of democracy in terms of other variables (political instability, inflation, investment, education, income distribution, property rights, and population growth). He concludes by considering the policy implications of these results.

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Contents

Introduction
1
12 A Basic Puzzle
3
13 An Analytical Structure
9
14 Outline of the Book
13
The Fundamental Political Environment for Economic Growth
15
21 The Basic Model
16
22 A Theoretical Discussion
21
23 Some Casual Observations
28
81 Political Systems Political Stability and Human Capital
190
82 Measurement of Human Capital
198
83 Some Preliminary Data on Education and Democracy
203
84 Model Specification
205
85 Empirical Analysis
207
86 Summary and Policy Implications
210
Democracy and Income Inequality Reconsidered
213
91 Theories and Findings on Democracy and Income Distribution
214

24 Summary and Policy Implications
36
Measuring Political Freedom Stability and Certainty
39
31 Political Freedom and Liberal Democracy
40
32 Political StabilityInstability
51
33 Policy CertaintyUncertainty
57
34 Joint Examination of Freedom Stability and Certainty
60
Testing the Political Determinants of Long Run Economic Growth
65
41 Methodology
66
42 The Statistical Model
69
43 Empirical Results
73
44 Continental Effects
82
Thailand
86
46 Summary and Policy Implications
89
Democracy Stability and Growth A Simultaneous Approach
93
51 A SimultaneousEquations Model
95
52 Data and Specification
103
Three Sets of Nested Relationships
109
54 Summary and Policy Implications
119
Political Institutions and Inflation An Evaluation of Three Models
123
Three Models
126
62 Preliminary Empirical Evidence
136
63 Model Specification and Data
141
64 Empirical Evidence
147
65 Summary and Policy Implications
153
Political Institutions and Private Investment
157
71 The Political Environment of Private Investment
158
72 Specification and Data
169
Domestic Private Investment
174
Foreign Direct Investment
180
75 Summary and Policy Implications
184
The Political Economy of HumanCapital Accumulation
189
92 Measurement Issues
224
93 Model Specification
228
94 Empirical Evidence
241
95 Summary and Policy Implications
248
Political Freedom and Economic Freedom
251
101 Definitions and Examples
252
102 Literature Review
255
103 Method and Data
260
104 Empirical Results
263
Indonesia
268
106 Summary and Policy Implications
272
Births and Politics
275
111 Literature Review
276
112 A PoliticalEconomic Model
279
113 Empirical Results
281
China
283
115 Summary and Policy Implications
293
Conclusions
295
121 Summaries of Major Findings
296
122 Some Policy Implications
299
123 Related and Future Research
307
Political Rights and CivilLiberties Indices
313
Institutionalized Democracy Index
315
A Brief Review of the Literature on Democracy Stability and Growth
319
Weighted Scores in the WorldEvent Interaction Survey Data Set
323
Coverage of Income Distribution by the Gini Coefficient
327
Measures of Economic Freedom
331
Notes
333
References
349
Index
379
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About the author (2003)

Yi Feng is the Luther Lee Chair in Government at Claremont Graduate University, where he also works as Provost and Vice President for Academic Affairs.

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