Answer:

Explanation:

The Interrelationship between Democracy and Economic Growth

There is a debate among economists on the relationship between democracy and

economic growth (e.g., Tang and Yung, 2005; Heo and Tan, 2001). Some researchers

find that the relationship is positive between them but others argued that it is negative.

Feng (1997),De Hann and Siermann (1995), and Helliwell (1994), who followed an

argument by Sirowy and Inkeles (1990), support the idea that there are three schools of

thought on the relationship between democracy and economic development.

The first school of thought claims that there is a direct relationship between

democracy and economic growth. The direct relationship consists of two perspectives,

which are the ‘compatibility’ perspective and the ‘conflict’ perspective. The

‘compatibility’ perspective argues that democracy promotes economic growth or

economic growth improves the level of democracy. In contrast, the ‘conflict’ perspective

claims that democracy hinders economic growth or economic growth impedes

democracy. The second school of thought argues that there is an indirect relationship

between democracy and economic growth. The indirect relationship occurs through some

channels, such as human CAPITAL, education, political stability, and investment. Reverse

causality of the relationship through the channels also EXISTS. Finally, according to the

third school, which is the so called ‘skeptical’ view, there is no systematic relationship

between democracy and economic development.

This article reviews existing studies on the relationship between democracy and

economic growth. A large MAJORITY of the studies which were reviewed in this paper used

econometric methodology and were done in the period from 1988 to 2010. The studies

used a variety of measurements of democracy and the most common indexes are Gastil

index and Gurr index. On the other hand, the most common used of measurement of

economic growth is GDP PER capita. Time series cross-sectional datasets were used

commonly in most of the studied reviewed