Since a long time, some controversies about the link between democracy and economic development have been raised by economists. In this research, we analyze first the impact of democracy on the economic growth in more than 40 democratic and undemocratic countries between 2000 and 2011. In a second time, we estimate the effects of economic growth on democracy. The results show evidence in support of a quadratic effect of the democracy on per capita GDP growth (an inverted U relationship) that is per capita GDP is found to be increasing in countries with a low level of democracy, but after a moderate level of democracy this relationship becomes negative. In addition, the results demonstrate that improvements in the standard of living stimulate democracy. The propensity for democracy raises with per capita GDP both in democratic and undemocratic countries. JEL Classification: C22, O43.
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