ERF 27th Annual Conference
Economic Resilience in Developing Countries: The Role of Democracy in the Face of External Shocks
No.
ERF27_20
Publisher
ERF
Date
May, 2021
Topic
E3. Prices, Business Fluctuations, and Cycles
F4. Macroeconomic Aspects of International Trade and Finance
E6. Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
O1. Economic Development
This paper examines the role of democracy in strengthening the resilience of developing economies in the face of exogenous negative external shocks. Our study uses the duration model to estimate how democracy can determine the probable duration of a spell of economic growth. Examining a panel of 96 developing countries observed over the 1965-2015 period, we found that democracy is a resilience factor, insofar as it helps to support growth spells in the event of negative external shocks. Our results show that an improvement in the democracy score is associated with an increase in the expected duration of a growth spell. The second finding is that some dimensions of democratic institutions like political participation and egalitarian dimension can conduct to sustain economic growth.
Authors
Mohamed Ali Trabelsi
Professor in Quantitative Methods, University of Tunis...
Authors
Salah Ahmed
Professor of Economics, Department of Economics, Faculty...