Is there a relationship between economic conditions and political structure?

The results of this investigation into the relationship between political environment and economic well-being are both disappointing and encouraging. PHONE is the only measure of economic well-being which is unambiguously and positively associated with democracies. Why this is true remains a mystery. The two reasons discussed earlier are both plausible, as in a third — namely, increasing availability of telephones reduces the costs of organizing special interest groups. To the extent that active participation of special interests is a necessary condition for the emergence or continuation of democratic government, telephones per capita will be related positively to the incidence of democracy. School enrollment per capita, news circulation per capita and GNP per capita — all showed a greater or lesser ability to explain government type. In the absence of interactive effects with PHONE, it must be noted that all of these measures were associated positively with the presence of democracy. It is the question of causation that cuts to the heart of the matter. Is democracy a prerequisite for economic progress or is it an income-elastic good? Is it neither, but rather an aspect of Teutonic culture, as suggested by Tullock, which also happens to be associated with economic well-being? It is my belief that this question of causality can only be analyzed effectively using time-series analysis. Unfortunately, data on economic variables beyond a decade ago exists for only a handful of countries; namely, the western democracies. It is my hope that other investigators have access to data which I am unaware of, or else can manage to shed light on the causality issue with the aid of cross-section data. I look forward to the results of future efforts in this area. Copyright Martinus Nijhoff Publishers 1984