New Institutional Economics and Political Economy

Democratic Governance and Institutions for Growth

Kim Bettcher
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Kim Bettcher leads CIPE’s knowledge management initiative, which captures lessons learned during more than two decades of democratic and economic institution-building around the world. The program identifies …

Institutions and policies that will favor growth are more likely to be put in place in a democratic policy environment. Some argue that democracy is less conducive to economic growth than authoritarianism, since the latter lacks the constraints that prevent those in power from swiftly undertaking growth-spurring policies. Yet the empirical evidence does not support that claim. In fact, the very characteristics of democracy that distinguish it from autocratic rule – such as openness, checks on authority, rule of law, and freedom of association – are the ones that make it a better environment for sustained growth. True democracy and functioning market economy share the same values of transparency, accountability, responsiveness, and constructive competition. They complement each other and provide an enabling environment where policy ideas can be freely debated and tested, and where entrepreneurs can flourish because their rights are equally protected.

 

Transcript available in English