Indiana University East’s School of Business and Economics Business Speaker Series presents Jeffry A. Jacob, a professor of economics at Bethel University. He will virtually present “Democracy and Growth: A Dynamic Panel Data Study” at 6 p.m. on December 1 on IU East Facebook Premiere at https://www.facebook.com/iueast/events.
The presentation is free and open to the public.
The Business Speaker Series is sponsored by the Charles Koch Foundation and First Bank Richmond. Co-sponsored by Delta Mu Delta, IU East Center for Economic Education, and the IU East Business and Economic Research Center.
As a Professor of Economics at Bethel University, Jacob teaches and researches in the areas applied econometrics, economic development and business analytics.
Jacob holds a Ph.D. in Economics from Southern Methodist University in Dallas, Texas, with specialization in development economics and applied econometrics. Over the past decade, he has been doing research studying the role of institutions in economic development. His articles have appeared in journals like Review of Economics and Institutions and International Review of Economics.
Jacob’s presentation will discuss how democracy influences a country’s economic growth.
Over the past several decades, and in particular after the fall of communism in Eastern Europe and Western Asia, the world has seen a steady rise in the number of countries that became democracies. In 1960, only 39% percent of the world’s countries had a democratically elected government, compared to 61% percent in 2010. While this dramatic rise in the world’s level of democratization has undoubtedly affected the political and social context of people’s lives, economists have been examining the question whether more democracy had any discernible impact on people’s material well-being, that is, economic growth and development.
Using data from over 120 countries over the 1961 to 2010 period, we find that the various democracy measures used in this study do not have a significant impact on economic growth. However, the variables that measure the quality of institutions including political stability exert an appreciably positive and statistically significant effect on growth. The results capture the tension between the various roles of the government in the economy.
While the choice of the political regime (democracy versus non-democracy) appears to matter little for economic development, a governments’ focus on improving the strength of the public institutions as well as maintaining political stability has a tremendously positive impact on economic growth.