Political and Economic Liberalization: Is this Relationship Non-Linear?
37 Pages Posted: 18 Feb 2007
Date Written: February 2007
Abstract
Why high levels of market liberalization can be supported by both repressive and liberal political regimes? Drawing from Acemoglu and Robinson (2006), we use a large dataset of world economies and document the existence of a U-shaped relationship between political and economic liberalization. This functional form explains the ongoing dynamics in the relationship between democratization and economic liberalization in the light of the political calculus that incumbent governments make when are confronted with policy decisions.
Keywords: Democratization, Economic Liberalization, Generalized Method of Moments
JEL Classification: C23, D72, O38, P16
Suggested Citation: Suggested Citation
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