Democracy Doesn’t Happen Over Night: Regime Change in Stages and Economic Growth

• In Event: Democratization and Regime Change

Abstract

We motivate and empirically analyse the idea that democratic regime change is not a discrete event but a two-stage process: in the first stage, countries enter into an ‘episode’ of political liberalization which can last for years or even decades; in the second stage, the ultimate outcome of the episode manifests itself and a nation undergoes regime change or not. Failure to account for this chronology risks biased estimates of the economic effects of democratic regime change since this ignores the relevance of the counterfactual group in which liberalisation failed. Using novel Varieties of Democracy (V-Dem) data on Episodes of Regime Transformation (ERT) for a large sample of countries from 1950 to 2014 we study this phenomenon in a repeated-treatment difference-in-difference framework which accounts for non-parallel pre-treatment trends and selection into treatment. Our findings suggest that a single event approach significantly underestimates the economic benefits from lasting democratic regime change.

Authors

• Vanessa Alexandra Boese

• Markus Eberhardt, University of Nottingham