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Growth Paradigms and Congruent Institutions: Estimating Context-Varying Effects of Political Institutions on Economic Performance*

  • Jonathan K. Hanson
Abstract

Traditional economic growth regressions are not adequate to identify the role of political institutions because they assume a universal growth paradigm exists. Instead, there are distinct paradigms of investment- and innovation-based growth, and the effects of political institutions vary across them. Using a dataset covering 83 countries from 1965–2008, this study employs a mixture models estimation to identify these paradigms. It finds that state authority is critical for countries engaged in investment-based growth, and competitive political participation tempers the pace of capital accumulation but increases productivity growth. Conversely, where innovation-based growth predominates, state authority has little effect and competitive political participation slows the pace of growth. Constraints on rulers do not support investment in either paradigm.

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Jonathan K. Hanson is Assistant Professor of Political Science at the Maxwell School of Citizenship and Public Affairs at Syracuse University, 100 Eggers Hall, Syracuse, New York, 13244, United States (johanson@syr.edu). I would like to thank the following people for their comments on this manuscript in its various stages: Pablo Beramendi, Keith Bybee, Matt Cleary, Margarita Estevez-Abe, Robert Franzese Jr., Allen Hicken, John Jackson, Irfan Nooruddin, Stu Thorson, participants in the Research Writing Seminar at Syracuse University and anonymous reviewers. Many thanks to Rachel Sigman for research assistance. To view supplementary material for this article, please visit http://dx.doi.org/10.1017/psrm.2013.20

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Political Science Research and Methods
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