The effect of democracy on economic growth: The case of OECD countries

Economic growt has been one of the main goals of all countries. In order for countries to achieve their economic growth targets, the factors affecting economic growth are gaining importance in terms of determining the policies to be implemented in the economy. In the past, the prosperity and wealth of countries were explained only by economic policies, the existence and sustainability of democracy are among the basic factors affecting economic growth. Although there is a consensus in the literature on the positive impact of economic freedoms on economic growth, today the effect of democracy on economic growth is being researched and discussed. This study aims to examine the impact of democracy on economic growth. In this context, an empirical analysis was carried out using data from OECD countries for the period 2010-2023. Panel data analysis was applied as an econometric method in the study. The cross- section dependency test was used for the analysis method. The, the second generation unit root test was performed and stationarity analysis was applied. Mundlak test was used to decide whether to use the rational effect model or the fixed effect model. According to the findings, it was concluded that the independent variables democracy and press freedom had a positive effect on economic growth. It was concluded that the other independent variable, economic freedom, had a negative effect on economic growth and the rule of law was not statistically significant on economic growth.