ECONOMIC GROWTH AND GOVERNANCE: A CROSS-NATIONAL STUDY

Abstract

In recent years, growing attention has been directed toward understanding how democracy influences a nation’s economic growth. While previous studies have produced mixed findings, this research investigates the extent to which democracy contributes to economic prosperity and whether this effect is influenced by a country’s level of corruption. Utilizing secondary data from 128 countries, drawn from the Economist Democracy Index and GDP statistics published by the Economist and World Bank in 2022, the study employs linear regression to explore the causal link between democratic governance and economic outcomes. Additionally, moderation analysis is used to assess how corruption levels modify this relationship. The results reveal a positive association between democracy and economic growth, with corruption acting as a significant moderating factor. Specifically, nations with lower corruption levels benefit more from democratic institutions, while those with higher corruption levels experience a diminished or even adverse impact. These findings provide valuable insights for policymakers and practitioners by highlighting the importance of aligning democratic reforms with anti-corruption strategies. The study underscores that reducing corruption is essential to maximizing the economic benefits of democracy and offers strategic recommendations for promoting sustainable economic development through improved governance.