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The Indirect Effect of Democracy on Economic Growth in the MENA Region (1990–2015)
Version 1
: Received: 29 July 2018 / Approved: 1 August 2018 / Online: 1 August 2018 (09:45:56 CEST)
A peer-reviewed article of this Preprint also exists.
Nosier, S.; El-Karamani, A. The Indirect Effect of Democracy on Economic Growth in the MENA Region (1990–2015). Economies 2018, 6, 61. Nosier, S.; El-Karamani, A. The Indirect Effect of Democracy on Economic Growth in the MENA Region (1990–2015). Economies 2018, 6, 61.
Abstract
This paper examines the indirect effect of democracy on economic growth using a dataset of 17 MENA countries from 1990 to 2015. Democracy is assumed to affect growth through a series of channels: education, health, physical capital accumulation per labor, government consumption, and trade openness. A system of six simultaneous equations, 3SLS, is used to estimate the effect of democracy on growth through these channels. For further analysis, the countries are classified into groups according to the democratic status on the one side, and the level of income on the other. The results indicate that democracy enhances growth through its positive effect on health in all classifications of countries within the MENA region. However, the effect of democracy on growth through education and physical capital/labor is non-monotonic. Democracy always hinders growth through government size and trade openness. Once all of these indirect effects are accounted for, the overall effect of democracy on growth is negative in less democratic countries and poor countries, but positive in more democratic countries and rich countries.
Keywords
economic growth; democracy; MENA; simultaneous equations
Subject
Business, Economics and Management, Economics
Copyright: This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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