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Civil liberties and economic development

Published online by Cambridge University Press:  20 May 2010

ARIEL BENYISHAY  and
ROGER R. BETANCOURT
ARIEL BENYISHAY*
Affiliation:
University of Maryland and Millennium Challenge Corporation, USA
ROGER R. BETANCOURT*
Affiliation:
University of Maryland and Millennium Challenge Corporation, USA
*
*Email: benyishay@econ.umd.edu
**Email: betancou@econ.umd.edu
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Abstract:

Skepticism prevails among a substantial number of economists over a possible connection between civil liberties and the level of economic activity. Until now, empirical research on economic growth has found mixed evidence on the influence of civil liberties. Disaggregation of the Freedom House Civil Liberties Index allows a fresh empirical look at the effect of human rights on long-term growth or economic development. Our results show that one of the four subcategories of the index outperforms all available indicators of property rights institutions in explaining long-term economic growth. This subcategory, Personal Autonomy and Individual Rights, captures the level of second generation human rights that affect the mobility of individuals with respect to housing, employment and university education, as well as the level of protection of property rights. This result is robust with respect to reverse causation, important omitted variables such as geography and human capital, as well as to a variety of sensitivity tests. We also discuss in our conceptual framework how civil liberties work as an indicator of the prevalence of the rule of law and how the latter affects growth or development as an essential public input.

Type
Research Article
Information
Journal of Institutional Economics , Volume 6 , Issue 3 , September 2010 , pp. 281 - 304
Copyright
Copyright © The JOIE Foundation 2010

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