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Foreign Aided: Why Democratization Brings Growth When Democracy Does Not

Published online by Cambridge University Press:  09 October 2013

Jacob Gerner Hariri
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Abstract

There is an unresolved puzzle in research on the economics of democracy. While there is consensus that democracy is not generally associated with higher rates of economic growth, recent studies have found that democratization is followed by growth. But why should becoming a democracy bring growth if being one does not? This article shows that a substantial and immediate influx of foreign aid into new democracies accounts for the positive growth effect of democratization. The domestic regime characteristics of neither democracy nor democratization therefore seems to bring growth. The importance of aid in explaining the democratization-growth nexus underscores that democratizations do not occur in vacuum and cannot be fully understood from internal factors alone.

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Articles
Information
British Journal of Political Science , Volume 45 , Issue 1 , January 2015 , pp. 53 - 71
Copyright
Copyright © Cambridge University Press 2013 

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Footnotes

*

Department of Political Science and Economics, Copenhagen University (email: jgh@ifs.ku.dk). I thank Robert Bates, Rune Bennike, Carl-Johan Dalgaard, Jørgen Elklit, Thraínn Eggertsson, Lene Hansen, Peter S. Jensen, Mogens Justesen, Robert Klemmensen Peter Kurrild-Klitgaard, Peter Nedergaard, David Dreyer Lassen, Jørgen Møller, Asmus Leth Olsen, Adam Przeworski, Shanker Satyanath, Svend-Erik Skaaning, Stefan Voigt, Asger Wingender, as well as the editor and three anonymous reviewers for very helpful comments on a previous version. Data replication sets and online appendices are available at http://dx.doi.org/doi:10.1017/S0007123413000276.

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