Speaker
Description
Democratic regime change has large positive effects on income per capita, yet the underlying transmission channels of this relationship are largely unexplored. We provide novel evidence studying the effect of democratic regime change on capital inflows in a large sample of economies from 1975 to 2015. Using heterogeneous difference-in differences estimators, we find that regime change causes an average 40-50% (60-95%) increase in gross capital (FDI) inflows within two decades. We document significant treatment effect heterogeneity by geography and colonial history (but not legal origin or culture), which we explain highlighting structural deficiencies in export concentration, trade costs, and complexity of production. We find little evidence that the geographic patterns arise from indirect effects of ‘nature’ shaping legal origin, culture, or colonial history.
| Keyword | Economic Growth |
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