India began the twentieth century as the jewel in the crown of the British empire. A hundred years later it begins the new millennium as a success story of economic growth in the developing world. Yet while India appears to have made this transition successfully, the challenges to its continued success are considerable and daunting (Bardhan 2009). Moreover, that many of its fellow former colonies in the developing world remain mired in what seems at times to be inescapable poverty, the stakes for understanding why some countries are able to enjoy better economic performance than others are apparent. While government programs can and do go a long way towards alleviating the suffering caused by poor economic conditions, generating sustainable and inclusive economic growth is possibly the surest way of doing so.

The challenges of economic development are made more difficult by a second normative goal for developing countries: developing democratic institutions that allow citizens to participate in the policymaking process by choosing their own leaders. The past fifty years have seen democracy spread across the globe, at least as a principle accepted by most people (Inglehart and Welzel 2005), and, despite reversals in democratic freedoms in some countries, the fact remains that more people live today in democratic countries than did in 1950. This increase in democracy globally is welcome in its own right, but the twin concerns of political and economic well-being raise an question of obvious pertinence: does democracy help or hurt national economic performance?