Working Paper: CEPR ID: DP18504
Authors: Assaf Razin; Efraim Sadka
Abstract: Regime changes toward autocracy typically reshape the judicial framework, effectively eroding the separation of powers and leading the nation toward an autocratic path. Recent instances of regime shift in Hungary, Poland, and Turkey offer templates of democratic erosion through manipulation and “democratic” means. Israel is in now amid a conflicting judicial overhaul. Whereas the manifestations of these patterns differ based on the distinct political, social, and historical contexts of each country, they invariably erode the Rule of Law and the democratic institutions. Their ideological stance sharply contrasts with the democratic norms upheld by major Western nations: the separation of powers, judicial autonomy, and the intricate web of political, civic, and social organizations cultivated since the Enlightenment. These century-old trends have been instrumental in fostering unprecedented prosperity. This paper overviews the economic consequences of regime changes from liberal democracy towards autocracy.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Regime changes towards autocracy (O17) | Erosion of judicial independence (K16) |
| Erosion of judicial independence (K16) | Negative impact on economic growth (F69) |
| Judicial reforms in Hungary and Poland (P37) | Diminished judicial autonomy (K16) |
| Diminished judicial autonomy (K16) | Capital flight (F21) |
| Diminished judicial autonomy (K16) | Currency depreciation (F31) |
| Diminished judicial autonomy (K16) | Inflationary pressures (E31) |
| Judicial overhaul in Israel (K41) | Threat to economic miracle (F69) |
| Threat to economic miracle (F69) | Diminished investor confidence (G19) |
| Diminished investor confidence (G19) | Slowdown in foreign investment (F21) |
| Slowdown in foreign investment (F21) | Negative impact on economic growth (F69) |