Munich Personal RePEc Archive

Democracy and economic growth: the role of intelligence in cross-country regressions

Salahodjaev, Raufhon (2015): Democracy and economic growth: the role of intelligence in cross-country regressions. Published in: Intelligence No. 50 (28 April 2015): pp. 228-234.

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Empirical literature has long conjectured that institutional arrangements, proxied by democracy, social capital and intelligence, are relevant determinants in cross-country differences in economic performance. Related literature, however, predominantly documents that democracy has either a negative or not significant impact on economic growth, while intelligence is assumed to have strong and direct effect on economic performance. We propose that that the effect of democratization is mediated by the degree of the approval to such policies, and that intelligence may alleviate or diminish the negative effect of weak institutions on economic growth. We empirically, investigate the interactive effect of democracy and intelligence on economic growth, using data from 93 nations, over the period 1970-2013. The results show that the relationship link between democracy and the real GDP growth varies with a nation’s level of cognitive abilities. The results remain robust to various estimation techniques, control variables and time periods.

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