Political Institutions, Trade Openness, and Economic Growth: New Evidence

We present new evidence on the relationship between political institutions, trade openness, and economic growth using a panel of over 200 countries and eight nonoverlapping five-year average observations for 1975–2010. We explore (1) whether political institutions lead to lower economic growth rates and (2) whether income per capita and trade openness curb the persistence of these institutions. The panel data estimation results suggest that most of our political institution proxies do not hinder economic growth. However, increases in per capita income, trade openness, and education curtail the persistence of these political institutions.