Working Paper: NBER ID: w19575
Authors: Jorge Braga de Macedo; Luis Brites Pereira; Joaquim Oliveira Martins; João Tovar Jalles
Abstract: This paper addresses the interactions between globalization, the quality of democracy, and economic convergence using simultaneous estimation techniques. To reflect process, we use multi-dimensional, de facto, and continuous measures of democracy and globalization. To reflect context, as defined by space (geography) and time (history), we control for the distance to the income frontier. Using this measure of development, we extend the test for the two-way relationship between democracy and globalization put forward by Eichengreen and Leblang (2008) for the period 1870-2000. Focusing on the more recent wave of globalization (1970-2005), we find a two-way relationship between democracy and globalization and also significant two-way relationships with development. In the restricted sample of non-OECD countries, however, democracy hurts development.
Keywords: Globalization; Democracy; Development
JEL Codes: F02; F5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| democracy (D72) | globalization (F60) |
| globalization (F60) | development (O39) |
| democracy (D72) | development (O39) |
| globalization (F60) | democracy (D72) |
| development (O39) | globalization (F60) |
| development (O39) | democracy (D72) |