Democracy and Growth: Evidence from Transition Economies
Assist. Prof. Dr. Ali Riza SANDALCILAR

The relationship between democracy and economic growth is one of the widely disputed issues in the literature. The relationship between political regime and economic dynamics has been proven. But, the real problem is the direction of the relationship. There has been not any consensus on this. In the historical process, convergence observed in democracy signifies positive direction of this relationship. Main purpose of this study is to analyse the effect of democracy on economic growth in transition economies. The panel data of 1992-2010 period is used in the study in order to examine 12 transitional economies belonging to Commonwealth of Independent States. The concept of democracy is dealt with as political and economic democracy within the scope of the study. The results of the assumptions puts forth that while economic democracy effects growth positively in transition economies, there is not any significant relation between growth and political democracy. It is concluded that political democracy effects growth in transitional economies indirectly through its effects on economic democracy.

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