Skip to main content Accessibility help
×
Home

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

  • JAVIER ALFONSO-GIL (a1), MARICRUZ LACALLE-CALDERÓN (a1) and ROCÍO SÁNCHEZ-MANGAS (a1)

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.

Copyright

Corresponding author

References

Hide All
Acemoglu, D. and Johnson, S. (2005), ‘Unbundling Institutions’, Journal of Political Economy, 113 (5): 949995.
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): 12311294.
Acemoglu, D., Johnson, S., Robinson, J., and Yared, P. (2008), ‘Income and Democracy’, The American Economic Review, 98 (3): 808842.
Acemoglu, D., Johnson, S., Robinson, J., and Yared, P. (2009), ‘Reevaluating the Modernization Hypothesis’, Journal of Monetary Economics, 56 (8): 10431058.
Acemoglu, D. and Robinson, J. (2012), Why Nations Fail, New York: Crown Publishers.
Aghion, P., Alesina, A., and Trebbi, F. (2007), ‘Democracy, Technology and Growth’, NBER Working Paper No. 13180.
Aixalá, J. and Fabro, G. (2009), ‘Economic Freedom, Civil Liberties, Political Rights and Growth: A Causality Analysis’, Spanish Economic Review, 11 (3): 165178.
Allen, R. (2009), The British Industrial Revolution in Global Perspective, Cambridge: Cambridge University Press.
Alvarez, J. and Arellano, M. (2003), ‘The Time Series and Cross-section Asymptotics of Dynamic Panel Data Estimators’, Econometrica, 71 (4): 11211159.
Ashraf, Q. and Galor, O. (2011), ‘Dynamics and Stagnation in the Malthusian Epoch’, The American Economic Review, 101 (5): 20032041.
Baltagi, B. (2008), Econometric Analysis of Panel Data, Chichester, UK: 4th edition, John Wiley & Sons, Ltd.
Barro, R. J. (1996), ‘Democracy and Growth’, Journal of Economic Growth, 1 (1): 127.
Benyishay, A. and Betancourt, R. (2010), ‘Civil Liberties and Economic Development’, Journal of Institutional Economics, 6 (3): 281304.
Berlin, I. (1958), Two Concepts of Liberty, Oxford: Clarendon Press.
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.
Clark, G. (2007), Farewell to Alms: A Brief Economic History of the World, Princeton, New Jersey: Princeton University Press.
Cole, J. S. (2003), ‘The Contribution of Economic Freedom to World Economic Growth: 1980–99’, Cato Journal, 23 (2): 189198.
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): 423435.
Crafts, N. (1985), British Economic Growth during the Industrial Revolution, Oxford: Clarendon Press.
De Haan, J. (2007), ‘Political Institutions and Economic Growth Reconsidered’, Public Choice, 131 (3): 281292.
De Haan, J. and Sturm, J. E. (2000), ‘On the Relationship Between Economic Freedom and Economic Growth’, European Journal of Political Economy, 16 (2): 215241.
De Long, J. B. and Shleifer, A. (1993), ‘Princes and Merchants: European City Growth Before the Industrial Revolution’, Journal of Law & Economics, 36 (2): 671702.
Domar, E. D. (1948), ‘The Problem of Capital Accumulation’, The American Economic Review, 38 (5): 777794.
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. 260304.
Faria, H. and Montesinos, H. (2009), ‘Does Economic Freedom Cause Prosperity? An IV Approach’, Public Choice, 141 (1): 103127.
Freedom House (2013), Freedom in the World 2013: Democratic Breakthroughs in the Balance, New York: Freedom House.
Galor, O. and Moav, O. (2001), ‘Evolution and Growth’, European Economic Review, 45 (4–6): 718729.
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): 806828.
García-Ferrer, A., Highfield, R., Palm, F., and Zellner, A. (1987), ‘Macroeconomic Forecasting Using Pooled International Data’, Journal of Business & Economic Statistics, 5 (1): 5367.
Gat, A. (2006), War in Human Civilization, Cambridge: Cambridge University Press.
Geary, P. (2002), The Myth of Nations: The Medieval Origins of Europe, Princeton, NJ: Princeton University Press.
Glaeser, E. L., La Porta, R., and Lopez-de-Silanes, F. (2004), ‘Do Institutions Cause Growth?’, Journal of Economic Growth, 9 (3): 271303.
Greif, A. (2004), The Institutional Path to the Modern Economy, Cambridge: Cambridge University Press.
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): 340354.
Gwartney, J., Lawson, R., and Hall, J. (2012), Economic Freedom of the World 2012 Annual Report, Vancouver, BC: Fraser Institute.
Harrod, R. (1939), ‘An Essay in Dynamic Theory’, Economic Journal, 49 (1): 1433.
Heid, B., Langer, J., and Larch, M. (2012), ‘Income and Democracy: Evidence From System GMM Estimates’, Economic Letters, 116 (2): 166169.
Im, K. S., Pesaran, M. H., and Shin, Y. (2003), ‘Testing for Unit Roots in Heterogeneous Panels’, Journal of Econometrics, 115 (1): 5374.
Isham, J., Kaufmann, D., and Pritchett, L. (1997), ‘Civil Liberties, Democracy, and the Performance of Government Projects’, The World Bank Economic Review, 11 (2): 219242.
Judson, R. A. and Owen, A. L. (1999), ‘Estimating Dynamic Panel Data Models: A Guide for Macroeconomists’, Economic Letters, 65 (1): 915.
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): 642660.
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. 352402.
King, R. and Levine, R. (1993), ‘Finance and Growth: Schumpeter Might be Right’, Quarterly Journal of Economics, 108 (3): 717737.
Kormendi, R. and Meguire, P. G. (1985), ‘Macroeconomics Determinants of Growth: Cross-Country Evidence’, Journal of Monetary Economics, 16 (2): 141163.
Kuznets, S. (1973), ‘Modern Economic Growth: Findings and Reflections’, The American Economic Review, 63 (3): 247258.
Landes, D. (1969), The Unbound Prometheus: Technological Change and Industrial Development in Western Europe From 1750 to the Present, Cambridge: Cambridge University Press.
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.
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): 124.
Lucas, R. (2004), Lectures on Economic Growth, Cambridge: Harvard University Press.
Maddison, A. (2010), The World Economy. Historical Statistics, online, http://www.ggdc.net/maddison
McCloskey, D. (2006), The Bourgeois Virtues: Ethics for an Age of Commerce, Chicago: The University of Chicago Press.
McCloskey, D. (2010), Bourgeois Dignity: Why Economics Can't Explain the Modern World, Chicago: The University of Chicago Press.
Mokyr, J. (1990), The Lever of Riches: Technological Creativity and Economic Progress, New York and London: Oxford University Press.
Mokyr, J. (2002), The Gifts of Athena: Historical Origins of the Knowledge Economy, Princeton, NJ: Princeton University Press.
North, D. C. (1981), Structure and Change in Economic History, New York: Norton.
North, D. C. (1990), Institution, Institutional Change and Economic Performance, Cambridge: Cambridge University Press.
North, D. C., Wallis, J. J., and Weingast, B. R. (2006), ‘A Conceptual Framework for Interpreting Recorded Human History’, NBER Working Paper No. 12795.
North, D. C., Wallis, J. J. and Weingast, B. R. (2009), Violence and Social Orders, Cambridge: Cambridge University Press.
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): 803832.
Parente, S. and Prescott, E. (2000), Barriers to Riches, Cambridge: MIT Press.
Persson, T. and Tabellini, G. (2006), ‘Democratic Capital: The Nexus of Political and Economic Change’, NBER Working Paper No. 12175.
Pritchett, L. (1997), ‘Divergence, Big Time’, Journal of Economic Perspectives, 11 (3): 317.
Polity, IV (2012), Historical Series 1800-2012, online, http://www.systemicpeace.org/polity/polity4.htm
Pomeranz, K. (2000), The Great Divergence: Europe, China, and the Making of the Modern World Economy, Princeton, NJ: Princeton University Press.
Przeworski, A. and Limongi, F. (1993), ‘Political Regimes and Economic Growth’, Journal of Economic Perspectives, 7 (3): 5179.
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.
Rodrik, D. and Wacziarg, R. (2005), ‘Do Democratic Transitions Bad Economic Outcomes?’, The American Economic Review, 95 (2): 5055.
Romer, P. M. (1990), ‘Endogenous Technological Change’, Journal of Political Economy, 98 (5): S71102.
Rosenberg, N. and Birdzell, L. E. (1986), How the West Grew Rich: The Economic Transformation of the Industrial World, New York: Basic Books.
Sachs, J. and Warner, A. (1995), ‘Economic Reform and the Process of Global Integration’, Brooking Papers on Economic Activity, 1: 1118.
Solow, R. M. (1956), ‘A Contribution to the Theory of Economic Growth’, Quarterly Journal of Economics, 70 (1): 6594.
Swan, T. (1956), ‘Economic Growth and Capital Accumulation’, Economic Record, 32 (2): 334361.
Wooldridge, J. M. (2002), Econometric Analysis of Cross Section and Panel Data, Cambridge: The MIT Press.
World Bank (2013), Doing Business 2013. The International Bank for Reconstruction and Development, Washington, D.C.: The World Bank.
Xu, Z. and Li, H. (2008), ‘Political Freedom, Economic Freedom and Income Convergence: Do Stages of Economic Development Matter?’, Public Choice, 135 (3): 183205.

Related content

Powered by UNSILO

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

  • JAVIER ALFONSO-GIL (a1), MARICRUZ LACALLE-CALDERÓN (a1) and ROCÍO SÁNCHEZ-MANGAS (a1)

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed.