Abstract

This study examined whether there was a relationship between the level of democracy and economic growth. For this purpose, the study took into account developed countries, also developing and some of the Eastern European countries and panel data analysis has been used to observe the relationship. Austria, Belgium, Denmark, France, Italia, Holland and the United States were selected as representative of developed countries. This study considered Argentina, Chile, Egypt, Greece, India and Turkey as developing countries. Also, some of the Eastern European countries which experienced communist regime such as Albania, Bulgaria and Check Republic, Estonia and Romania have been accounted and evaluated in the developing countries category. The results suggested that the level of democracy did not affect economic growth for developed countries, yet the level of democracy negatively affected economic growth of some of the Eastern European countries.

Key words: Panel data, democracy, communist experience, economic growth, polity 2 index.