Democracy and Economic Growth
When democracy is operational, it fosters economic growth by increasing human capital accumulation and reducing income inequalities. In the political economy, there is a common belief that democracy impairs economic growth (Acemoğlu et al., 2018). Democracy promotes a free market economy where every institution enjoys independence. Institutions create freedom for physical and human freedom. It establishes better opportunities that eliminate control of the authoritarian governments (Li & Leung, 2015). Giving equal public rights allows them to prefer activities, which grow the economy. Democratic nations enable the public to improve their living standards and minimize poverty constraints. Low-income earning societies suffer from social conflicts, which impair economic freedom. A free culture influences the social and human capital to trigger the productive abilities of every institution (Lozada, 2020). Also, democratic systems increase the size and capacity of the government in fostering economic growth. The government creates sound systems, which enhance labor productivity—as such, having a working population quantifies fair use of resources to grow the economy in terms of the national output. Autocratic regimes need to formulate the right policies and adopt effective systems of governance to promote economic growth. Therefore, democracy is a significant element that steers the development of any economy.
References
Acemoğlu D., Naidu S., Robinson J. & Restre P. (2018) “Democracy and economic growth: New evidence” (Promarket, Fe 6, 2018) URL: https://promarket.org/2018/02/06/democracy-economic-growth-new-evidence/
Li, R., & Leung, T. (2015). Is democracy a pre-condition in economic growth? A perspective from the rise of modern China. UN Chronicle | The Magazine of the United Nations. https://unchronicle.un.org/article/democracy-pre-condition-economic-growth-perspective-rise-modern-china
Lozada, C. (2020). Democracy, dictators, and growth. https://www.nber.org/digest/dec04/w10568.html