Authoritarian Regimes and Economic Development: An Empirical Reflection

Abstract

Since the recent emphasis on institutions for overall economic development of the countries, the research in this strand has expanded enormously. In this study, we want to see the impact of political institutions on economic development in pure cross-country setting. We take the Human Development Index (HDI) as a measure of economic development and use two alternative measures of dictatorship. We find that dictatorship is adversely affecting economic development in our sample of 92 countries. For instance, transition from extreme dictatorship to ideal democracy would increase HDI by 17 percent. Moreover, our results are robust to alternative specifications and the problems of endogeneity and reverse causation as is shown by the results of 2 Stages Least Squares (2SLS). JEL Classification: P16, H11, H41, H42 Keywords: Economic Development, Human Development Index, Dictatorship