The Impact of Democratization on Economic Growth in Asia: An Interrupted Time-Series Analysis

Abstract

The Third Wave of Democratization in Asia occurred as a result of economic development (e.g. South Korea and Taiwan) or financial crisis (e.g. The Philippines and Thailand). As a result, the primary focus of new democratic governments in Asian countries is likely to be economic performance. Despite a vast volume of studies, there is a void in quantitative studies on the impact of democratization on economic growth. To fill in the gap in the literature, we have empirically tested how the transition to democracy affected economic growth in Asia, using interrupted time-series analysis. In contrast to our expectation of significant (positive or negative) impact of the transition to democracy on economic growth, particularly negative effects on economic growth at the early stage of democratization process, our analysis shows that the transition to democracy does not have a significant impact on economic growth in Asia. In other words, democratization does not seem to help or hamper economic growth.