Institutions, political regime types, and economic development: An institutionalist perspective

This study examines the relationship between political regime types and economic development. The existence, direction of determination, the degree of causality and the empirical dimensions of this relationship have been discussed widely in the literature. This thesis has emerged in a context in which the international power structure is undergoing a sea change in favour of emerging countries and the number of illiberal regimes is on the rise at a time that liberal development models have lost appeal in the post-2008 crisis. The main aim of the thesis is to reconsider the relationship between different constellations of political institutions and economic development performance, which have gained importance in a changing world order, and to contribute to the elucidation of causal mechanisms. In this thesis, in order to test the modernization theory's hypothesis based on the fact that economic development will ultimately lead to democracy, the Chinese case will be considered as the most likely case and it will be shown that modernization framework appears to lost its validity. It is also argued that political regime type, as explanatory variable, is one of the determinants of economic development. It is hypothesized in particular that liberal democratic regimes offer a more favourable political-institutional framework than illiberal institutional structures in promoting and sustaining economic development. In this thesis, an institutional analysis is developed from a comparative perspective in order to unveil the causal mechanisms. Liberal democratic regimes increase economic productivity through inclusive institutions as well as through civil rights and freedoms embedded in this institutional framework. They indirectly encourage human and social capital, technological development and inovation and development-enhancing economic reforms, and provide non-market conditions for development through conflict management institutions providing social and political stability.