The impact of democracy on the transition through the middle income range

Abstract

This paper finds evidence in support of the view that democracy further facilitates growth through middle income thresholds defined between $8000 and $15,000 GDP per capita. Recent studies suggest that rapidly developing economies experience an economic slowdown when per capita income approaches this range. Prior research indicates that structural reforms supportive of democracy are needed to transition beyond these thresholds. Our analysis corroborates these findings and may have important implications for rapidly growing countries approaching these income levels, such as China and India.