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Safeguarding Economic Growth Amid Democratic Backsliding: The Primacy of Institutions over Innovation

Year: 2025

Type: article

Abstract: This paper investigates how democracy influences economic growth through innovation and institutional quality. Using an augmented Solow growth model and panel-data mediation analysis across 123 countries (2011–2022), we quantify democracy’s impact on GDP per capita. Our results show that institutional quality accounts for 83.3% of democracy’s total effect on economic output, while innovation explains only 16.7%. This study contributes to the literature by distinguishing between institutional and innovation channels in the democracy–growth nexus and provides policy-relevant insights for promoting inclusive economic growth (SDG 8) and building resilient infrastructure and innovation (SDG 9).

Source: Economies

DOI: 10.3390/economies13080237

Authors: Ran Ben Malka, Sharon Hadad

Institution: Sapir College

Language: English

Topic: Economic Growth and Productivity

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure, Peace, justice, and strong institutions

Open Access status: gold

Estimated APC paid: $2,172