World Democracy and World Development: A Macro-systemic Level Causal Analysis of Democracy and Economic Development, 1960-2018

Abstract

The long-term progressions of political freedom and economic wealth have characterized the post-World War era. The scholarly debate on how democracy and economic development are related, although having continued over multiple decades, is still lively. Does a more democratic world lead to a wealthier world? Does a more affluent world ensure a freer world? Or are political development and economic development separate processes independent from each other? This present study aims to help establish the causality between political development and economic development at a macro systemic level. I identify the possible causal mechanisms for the democracy-development nexus and draw a testable hypothesis. Empirically, I set up a set of vector autoregression-based Granger causality tests. The test results do not support any causal relationship between world democracy and world development.