Chapter Three



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Causal Mechanisms
Because growth is the end-product of many contributing factors, it is exceedingly difficult to present a unified model to account for changes in per capita GDP. (Such are the shortcomings of general theory that the once-thriving field of macroeconomics is now moribund.) Macroeconomic models, while essential, are highly reductionist. Our task is simplified to the extent that our theoretical focus is narrowly focused on a country’s regime-type. However, since a country’s political institutions may affect virtually all other factors that contribute to growth this scarcely restricts our theoretical field of vision. Indeed, current shift in macroeconomic theory away from an exclusive focus on physical capital and towards factors such as human capital, social capital, and “good institutions”, which might be referred to as political capital reinforces this conclusion. Since government policy directly affects these factors, it stands to reason that regime-type might have important effects on aggregate growth. One implication of “endogenous growth” theory is to emphasize the primacy of politics.

But what, precisely, are the causal mechanisms? Most of the topics discussed in later chapters might be regarded as mediating factors in the regime/growth relationship. Insofar as the accumulation of experience under democratic rule causes improvements in economic policy (chapter four), infrastructure (chapter five), policy continuity (chapter six), education (chapter eight), public health (chapter nine), and gender equality (chapter ten), these improvements should contribute to improved growth performance. Since these factors are discussed at length in later chapters, we leave them in abeyance.





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