Published in
GARNET working paper no 71/09
Abstract
This paper investigates how democracy and dictatorship affect economic growth in Sub-Saharan Africa, and whether the effect from democracy on growth depends on level of state capacity. The paper particularly focuses on the adverse economic effects of dictatorial regimes in countries with weak state institutions. In such contexts, leaders are free to pursue policies that are macroeconomically inefficient, but which enhance leaders’ survival in office and increase their personal wealth. The empirical analysis shows that democracy most likely contributes to higher growth rates in Sub-Saharan Africa, and that democracy has a larger positive effect on growth in Africa than globally. Moreover, statistical analyses, both on African and global samples, show that democracy has a particularly positive effect in countries with weak state institutions. The interaction between weak state capacity and dictatorship is a vital factor underlying Africa’s many economic development disasters.