The democracy income‐growth nexus in the southern African development community revisited. (10th August 2020) - Kouassi, Eugene
Abstract: This paper uses a dynamic panel model to examine the link between democracy and income growth in the Southern African Development Community regional bloc. The democratic capital stock, which captures the nurturing and strengthening of the policy and decision‐making environment and processes, as well as other social institutions in a nation, regardless of the degree of technological development is used as proxy for democracy. This distinguishes our approach from earlier studies of this nature; particularly for developing countries of sub‐Saharan Africa. Our results suggest that democracy has no direct impact, and perhaps no impact at all on income growth, even though there appears to be many complementarities between democratic institutions and the immediate ingredients of economic development. The results of our analysis are also robust to alternative definitions of democracy. Moreover, the conflictual signals that derive from our sensitivity analyses using the indices of ethno‐linguistic fractionalization and the politically relevant ethnic groups further strengthen the nature of the complexities associated with the debate on democracy and income growth in developing countries. In the absence of the democracy variable, our analysis reveals that income growth is significant, even with high ethnolinguistic fractionalization. These no doubt call for additional inquiries and methodological constructs in the income‐growth democracy nexus literature.