Arnold Kling

What Makes Countries Grow?

Arnold Kling, Great Questions of Economics
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With the U.S. Treasury Secretary and a leading Senator talking about growing up without indoor plumbing, and with the Davos World Economic Forum wringing its hands over uneven economic progress, I decided it was time to look up some analysis of the causes of differences in economic growth around the world. Authors Richard Roll and John Talbott attempted to use "event studies" to sort out the causal relationship between political freedom and economic prosperity. They reported,

When countries undertake a democratic change such as deposing a dictator, they enjoy a dramatic spurt in economic growth, which persists for at least two decades. In contrast, an anti-democratic event is followed by a reduction in growth.

Discussion Question. Is China an exception to the rule that political freedom is required for economic growth?

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