Hostname: page-component-78c5997874-4rdpn Total loading time: 0 Render date: 2024-11-19T08:21:14.711Z Has data issue: false hasContentIssue false
  • English
  • Français

Civil liberty and economic growth in the world: a long-run perspective, 1850–2010

Published online by Cambridge University Press:  17 March 2014

JAVIER ALFONSO-GIL ,
MARICRUZ LACALLE-CALDERÓN  and
ROCÍO SÁNCHEZ-MANGAS
JAVIER ALFONSO-GIL*
Affiliation:
Universidad Autónoma de Madrid, Madrid, Spain
MARICRUZ LACALLE-CALDERÓN*
Affiliation:
Universidad Autónoma de Madrid, Madrid, Spain
ROCÍO SÁNCHEZ-MANGAS*
Affiliation:
Universidad Autónoma de Madrid, Madrid, Spain
*
*Email: javier.alfonso@uam.es
**Email: maicu.lacalle@uam.es
***Email: rocio.sanchez@uam.es
Get access Rights & Permissions [Opens in a new window]

Abstract:

The objective of this paper is to study the relationship between economic growth and civil liberty across the globe in the long run. To fulfill this aim, we use an unbalanced panel of 149 countries for the period 1850–2010 with data on gross domestic product (GDP) from Maddison, and data on civil liberties from Polity IV. The dynamics of both variables are investigated. Once country and time effects are accounted for in a dynamic panel data model, our results show that movements toward higher levels of civil liberty are associated with higher economic growth rates. Therefore, we find that civil liberties are a relevant factor to explain economic growth. We perform some sensitivity tests that confirm the robustness of our results.

Type
Research Article
Information
Journal of Institutional Economics , Volume 10 , Issue 3 , September 2014 , pp. 427 - 449
Copyright
Copyright © Millennium Economics Ltd 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D. and Johnson, S. (2005), ‘Unbundling Institutions’, Journal of Political Economy, 113 (5): 949–995.Google Scholar
Acemoglu, D., Johnson, S., and Robinson, J. A. (2002), ‘Reversal of Fortune: Geography and Institutions in the Making of the Modern World Income Distribution’, Quarterly Journal of Economics, 117 (4): 1231–1294.CrossRefGoogle Scholar
Acemoglu, D., Johnson, S., Robinson, J., and Yared, P. (2008), ‘Income and Democracy’, The American Economic Review, 98 (3): 808–842.Google Scholar
Acemoglu, D., Johnson, S., Robinson, J., and Yared, P. (2009), ‘Reevaluating the Modernization Hypothesis’, Journal of Monetary Economics, 56 (8): 1043–1058.Google Scholar
Acemoglu, D. and Robinson, J. (2012), Why Nations Fail, New York: Crown Publishers.Google Scholar
Aghion, P., Alesina, A., and Trebbi, F. (2007), ‘Democracy, Technology and Growth’, NBER Working Paper No. 13180.Google Scholar
Aixalá, J. and Fabro, G. (2009), ‘Economic Freedom, Civil Liberties, Political Rights and Growth: A Causality Analysis’, Spanish Economic Review, 11 (3): 165–178.Google Scholar
Allen, R. (2009), The British Industrial Revolution in Global Perspective, Cambridge: Cambridge University Press.Google Scholar
Alvarez, J. and Arellano, M. (2003), ‘The Time Series and Cross-section Asymptotics of Dynamic Panel Data Estimators’, Econometrica, 71 (4): 1121–1159.Google Scholar
Ashraf, Q. and Galor, O. (2011), ‘Dynamics and Stagnation in the Malthusian Epoch’, The American Economic Review, 101 (5): 2003–2041.Google Scholar
Baltagi, B. (2008), Econometric Analysis of Panel Data, Chichester, UK: 4th edition, John Wiley & Sons, Ltd.Google Scholar
Barro, R. J. (1996), ‘Democracy and Growth’, Journal of Economic Growth, 1 (1): 1–27.Google Scholar
Benyishay, A. and Betancourt, R. (2010), ‘Civil Liberties and Economic Development’, Journal of Institutional Economics, 6 (3): 281–304.Google Scholar
Berlin, I. (1958), Two Concepts of Liberty, Oxford: Clarendon Press.Google Scholar
Bolt, J. and van Zanden, J. L. (2013), ‘The First Update of the Maddison Project; Re-Estimating Growth Before 1820’, Maddison Project Working Paper 4.Google Scholar
Clark, G. (2007), Farewell to Alms: A Brief Economic History of the World, Princeton, New Jersey: Princeton University Press.Google Scholar
Cole, J. S. (2003), ‘The Contribution of Economic Freedom to World Economic Growth: 1980–99’, Cato Journal, 23 (2): 189–198.Google Scholar
Compton, R. A., Giedeman, D. C., and Hoover, G. A. (2011), ‘Panel Evidence on Economic Freedom and Growth in the United States’, European Journal of Political Economy, 27 (3): 423–435.Google Scholar
Crafts, N. (1985), British Economic Growth during the Industrial Revolution, Oxford: Clarendon Press.Google Scholar
De Haan, J. (2007), ‘Political Institutions and Economic Growth Reconsidered’, Public Choice, 131 (3): 281–292.Google Scholar
De Haan, J. and Sturm, J. E. (2000), ‘On the Relationship Between Economic Freedom and Economic Growth’, European Journal of Political Economy, 16 (2): 215–241.Google Scholar
De Long, J. B. and Shleifer, A. (1993), ‘Princes and Merchants: European City Growth Before the Industrial Revolution’, Journal of Law & Economics, 36 (2): 671–702.CrossRefGoogle Scholar
Domar, E. D. (1948), ‘The Problem of Capital Accumulation’, The American Economic Review, 38 (5): 777–794.Google Scholar
Engerman, S. L. and Sokolof, K. L. (1997), ‘Factor Endowments, Institutions and Differential Paths of Growth Among New World Economies’, in: Haber, S. (ed.), How Latin America Fell Behind, Stanford, CA: Stanford University Press, pp. 260–304.Google Scholar
Faria, H. and Montesinos, H. (2009), ‘Does Economic Freedom Cause Prosperity? An IV Approach’, Public Choice, 141 (1): 103–127.Google Scholar
Freedom House (2013), Freedom in the World 2013: Democratic Breakthroughs in the Balance, New York: Freedom House.Google Scholar
Galor, O. and Moav, O. (2001), ‘Evolution and Growth’, European Economic Review, 45 (4–6): 718–729.Google Scholar
Galor, O. and Weil, D. (2000), ‘Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond’, The American Economic Review, 90 (4): 806–828.CrossRefGoogle Scholar
García-Ferrer, A., Highfield, R., Palm, F., and Zellner, A. (1987), ‘Macroeconomic Forecasting Using Pooled International Data’, Journal of Business & Economic Statistics, 5 (1): 53–67.Google Scholar
Gat, A. (2006), War in Human Civilization, Cambridge: Cambridge University Press.Google Scholar
Geary, P. (2002), The Myth of Nations: The Medieval Origins of Europe, Princeton, NJ: Princeton University Press.Google Scholar
Glaeser, E. L., La Porta, R., and Lopez-de-Silanes, F. (2004), ‘Do Institutions Cause Growth?’, Journal of Economic Growth, 9 (3): 271–303.CrossRefGoogle Scholar
Greif, A. (2004), The Institutional Path to the Modern Economy, Cambridge: Cambridge University Press.Google Scholar
Gundlach, E. and Paldam, M. (2009), ‘A Farewell to Critical Junctures: Sorting Out Long-run Causality of Income and Democracy’, European Journal of Political Economy, 25 (3): 340–354.CrossRefGoogle Scholar
Gwartney, J., Lawson, R., and Hall, J. (2012), Economic Freedom of the World 2012 Annual Report, Vancouver, BC: Fraser Institute.Google Scholar
Harrod, R. (1939), ‘An Essay in Dynamic Theory’, Economic Journal, 49 (1): 14–33.Google Scholar
Heid, B., Langer, J., and Larch, M. (2012), ‘Income and Democracy: Evidence From System GMM Estimates’, Economic Letters, 116 (2): 166–169.Google Scholar
Im, K. S., Pesaran, M. H., and Shin, Y. (2003), ‘Testing for Unit Roots in Heterogeneous Panels’, Journal of Econometrics, 115 (1): 53–74.Google Scholar
Isham, J., Kaufmann, D., and Pritchett, L. (1997), ‘Civil Liberties, Democracy, and the Performance of Government Projects’, The World Bank Economic Review, 11 (2): 219–242.Google Scholar
Judson, R. A. and Owen, A. L. (1999), ‘Estimating Dynamic Panel Data Models: A Guide for Macroeconomists’, Economic Letters, 65 (1): 9–15.Google Scholar
Justesen, M. (2008), ‘The Effect of Economic Freedom on Growth Revisited: New Evidence on Causality From a Panel of Countries 1970–1999’, European Journal of Political Economy, 24 (3): 642–660.Google Scholar
Kaufmann, D. (2005), ‘Human Rights and Governance: The Empirical Challenge’, in: Alston, P. and Robinson, M. (eds.), Human Rights and Development: Towards Mutual Reinforcement, Oxford: Oxford University Press, pp. 352–402.Google Scholar
King, R. and Levine, R. (1993), ‘Finance and Growth: Schumpeter Might be Right’, Quarterly Journal of Economics, 108 (3): 717–737.CrossRefGoogle Scholar
Kormendi, R. and Meguire, P. G. (1985), ‘Macroeconomics Determinants of Growth: Cross-Country Evidence’, Journal of Monetary Economics, 16 (2): 141–163.Google Scholar
Kuznets, S. (1973), ‘Modern Economic Growth: Findings and Reflections’, The American Economic Review, 63 (3): 247–258.Google Scholar
Landes, D. (1969), The Unbound Prometheus: Technological Change and Industrial Development in Western Europe From 1750 to the Present, Cambridge: Cambridge University Press.Google Scholar
Landes, D. (1990), ‘Why Are We So Rich and They So Poor?’, The American Economic Review, 80 (2), Papers and Proceedings of the Hundred and Second Annual Meeting of the American Economic Association: 1–13.Google Scholar
Levin, A., Lin, C. F., and Chu, C. (2002), ‘Unit Root Test in Panel Data: Asymptotic and Finite Sample Properties’, Journal of Econometrics, 108 (1): 1–24.Google Scholar
Lucas, R. (2004), Lectures on Economic Growth, Cambridge: Harvard University Press.Google Scholar
Maddison, A. (2010), The World Economy. Historical Statistics, online, http://www.ggdc.net/maddisonGoogle Scholar
McCloskey, D. (2006), The Bourgeois Virtues: Ethics for an Age of Commerce, Chicago: The University of Chicago Press.Google Scholar
McCloskey, D. (2010), Bourgeois Dignity: Why Economics Can't Explain the Modern World, Chicago: The University of Chicago Press.CrossRefGoogle Scholar
Mokyr, J. (1990), The Lever of Riches: Technological Creativity and Economic Progress, New York and London: Oxford University Press.Google Scholar
Mokyr, J. (2002), The Gifts of Athena: Historical Origins of the Knowledge Economy, Princeton, NJ: Princeton University Press.Google Scholar
North, D. C. (1981), Structure and Change in Economic History, New York: Norton.Google Scholar
North, D. C. (1990), Institution, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.Google Scholar
North, D. C., Wallis, J. J., and Weingast, B. R. (2006), ‘A Conceptual Framework for Interpreting Recorded Human History’, NBER Working Paper No. 12795.Google Scholar
North, D. C., Wallis, J. J. and Weingast, B. R. (2009), Violence and Social Orders, Cambridge: Cambridge University Press.Google Scholar
North, D. C., and Weingast, B. R. (1989), ‘Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England’, The Journal of Economic History, 49 (4): 803–832.Google Scholar
Parente, S. and Prescott, E. (2000), Barriers to Riches, Cambridge: MIT Press.Google Scholar
Persson, T. and Tabellini, G. (2006), ‘Democratic Capital: The Nexus of Political and Economic Change’, NBER Working Paper No. 12175.Google Scholar
Pritchett, L. (1997), ‘Divergence, Big Time’, Journal of Economic Perspectives, 11 (3): 3–17.Google Scholar
Polity, IV (2012), Historical Series 1800-2012, online, http://www.systemicpeace.org/polity/polity4.htmGoogle Scholar
Pomeranz, K. (2000), The Great Divergence: Europe, China, and the Making of the Modern World Economy, Princeton, NJ: Princeton University Press.Google Scholar
Przeworski, A. and Limongi, F. (1993), ‘Political Regimes and Economic Growth’, Journal of Economic Perspectives, 7 (3): 51–79.CrossRefGoogle Scholar
Rodrik, D., Subramanian, A., and Trebbi, F. (2002), ‘Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development’, NBER Working Paper No. 9305.Google Scholar
Rodrik, D. and Wacziarg, R. (2005), ‘Do Democratic Transitions Bad Economic Outcomes?’, The American Economic Review, 95 (2): 50–55.Google Scholar
Romer, P. M. (1990), ‘Endogenous Technological Change’, Journal of Political Economy, 98 (5): S71–102.Google Scholar
Rosenberg, N. and Birdzell, L. E. (1986), How the West Grew Rich: The Economic Transformation of the Industrial World, New York: Basic Books.Google Scholar
Sachs, J. and Warner, A. (1995), ‘Economic Reform and the Process of Global Integration’, Brooking Papers on Economic Activity, 1: 1–118.Google Scholar
Solow, R. M. (1956), ‘A Contribution to the Theory of Economic Growth’, Quarterly Journal of Economics, 70 (1): 65–94.Google Scholar
Swan, T. (1956), ‘Economic Growth and Capital Accumulation’, Economic Record, 32 (2): 334–361.Google Scholar
Wooldridge, J. M. (2002), Econometric Analysis of Cross Section and Panel Data, Cambridge: The MIT Press.Google Scholar
World Bank (2013), Doing Business 2013. The International Bank for Reconstruction and Development, Washington, D.C.: The World Bank.Google Scholar
Xu, Z. and Li, H. (2008), ‘Political Freedom, Economic Freedom and Income Convergence: Do Stages of Economic Development Matter?’, Public Choice, 135 (3): 183–205.CrossRefGoogle Scholar