The changing relationship between Democracy and Economic Growth (log GDP)

Question

There has been contradicting evidence on whether being a democratic state is correlated with economic growth and/or higher GDP per capita. For instance, Barro (1997) argues in his book that a democratic transition and providing the public with more political rights do not lead to higher economic growth per se. More recent literature by Acemoglu et al. (2019) challenges Barro's view and suggests that becoming a democracy is associated with higher GDP per capita in the long-run. The paper's findings are based on data 175 countries between 1960 to 2010,

I ran the same correlation between using aggregate log GDP and democracy but with 184 countries and using data from 2010 onwards until 2019. However, I used democracy index by the EIU. I found no apparent relationship between the two indicators, and I am curious what might be causing this? For instance, one explanation might be the typical measurement error/drawbacks of relying heavily on democratic score indices such as the one used here or by Acemoglu et al. (2019). Another hypothesis is that the world has changed drastically in the past decade, and specifically the economic rapid rise of high growth brutal autocracies such as China, UAE, Singapore, etc might be causing us to observe this small correlation between the two measures (i.e. log GDP and democracy).

Answer 1

Your graph is fairly meaningless, since you have plotted GDP, and not GDP per capita.

This means that the richest country appears to be "China". China has the largest GDP, but mostly because it is so populous. Luxembourg is far richer than China, per person, but as it's population is so small, it seems to be a poor country.

If you use GDP per capita (PPP) you get a graph like this

This shows roughly three groups: Poor countries: these have democracy scores between 1 and 7 and very low incomes. There is little correlation for this group. Liberal democracies countries: These have democracy values from 6 to 10 and a clear correlation, merging with the poor countries at one end. Oil rich countries: These form a scattering of points with democracy values between 2 and 9, but much richer than other countries with similar democracy values.

So a correlation exists, for countries that are no the poorest.

Answer 2

As James K noted, a more meaningful comparison is between Democracy Index and GDP per Capita. I just wanted to build on his answer with a little more data and a chart that also incorporates population visually (bubble size) across time. See this visualization, note that you can...

• View this comparison for the years 2006, 2008, 2010 - 2022,
• Export the data as a CSV or JSON,
• See and explore data sources on the left,
• And click each country to dive into more country-specific metrics.

Here's a screenshot for those metrics in 2020:

Full disclosure I am one of the founders of this project but this is exactly the type of geopolitical data we want to make easy to explore!