This paper introduces a new methodology to examine the empirical relationship

between democracy and economic growth. Democratic institutions are assumed to affect growth through a series of channels. We specify and estimate a full system of equations determining growth and the channel variables. Results suggest that democracy fosters growth by improving the accumulation of human capital and, less robustly, by lowering income inequality. On the other hand, democracy hinders growth by reducing the rate of physical capital accumulation and, less robustly, by raising the ratio of government consumption to GDP. Once all of these indirect effects are accounted for, the overall effect of democracy on economic growth is moderately negative. Our results indicate that democratic institutions are responsive to the demands of the poor by expanding access to education and lowering income inequality, but do so at the expense of physical capital accumulation.

Extensively revised since the first edition was published in 1989, this analytically balanced and empirically rich volume thoroughly examines the historical, cultural, social, economic, political, and international factors that affect both the prospects for and the nature of political democracy in Latin America.

The book reflects improvements in democratic trends in some countries, but also the erosion of democratic advances in others, with substantial malaise regarding key political actors and institutions and continuing concerns about the impact on democratic consolidation of economic constraints, weak states, judicial inefficacy, and high degrees of inequality. A comprehensive introduction precedes the nine country chapters, which follow a similar format to facilitate comparisons.

Although Africa has been one of the least democratic regions of the world, it has been experiencing widespread pressures for democratic change since 1990. Although pressure-from both domestic civil societies and international donors-has failed to bring about a transition to democracy in most cases, it has succeeded in many. Today, about a third of all African countries are at least electoral democracies, and virtually all regimes in sub-Saharan Africa have at least legalized opposition parties. Conventional political science theories view Africa's democratic prospects as grim because of its extreme poverty and deep ethnic divisions. This essay takes a more hopeful and "developmental" view. It argues that democratic change can occur in Africa and must if it is to develop economically. But this will inevitably involve a long-term process of political and social change and, in particular, institution building. African countries need new, more appropriate, and more effective institutions to control corruption, provide a market-oriented enabling environment for economic growth, and generate incentives for political parties to craft broad multiethnic appeals and constituencies. If institutions of governance, electoral politics, and civil society can be strengthened and innovatively designed, there is hope for democracy in Africa. But this will also require heavy international conditionality and pressure for more responsible policies and more effective institutions, as well as greater international support for those African regimes that appear serious about democracy and good governance. African societies are ready for a new democratic beginning, but they require the right institutional frameworks at home and vigorous engagement of the international community if deeply entrenched patterns of statism, corruption, repression, ethnic exclusion, and violence are to be overcome.

On 26-27 January 1996, the National Endowment for Democracy's International Forum for Democratic Studies and the Pacific Council on International Policy convened a one-and-a-half-day conference on democratic development and economic growth in East Asia and Latin America. The conference sought to shed light on the relationship between constructing democratic governance and building market economies in both regions.Participating in the meeting were 18 eminent scholars from Asia, Latin America, the United Kingdom, and the United States. Not all participants were able to attend the second day's morning session. About 30 additional scholars, business and community leaders, and members of the press attended as observers. Carl Gershman, president of the National Endowment for Democracy, gave the luncheon address. (Names in italics in this report are identified in the appendix.)

This report summarizes the presentations and comments made during the conference. While every effort has been made to portray accurately the range of opinions expressed, space and organizational considerations have required omissions and paraphrasing. This report was written by Chappell Lawson, a graduate student in political science at Stanford University, and edited by the International Forum for Democratic Studies and the Pacific Council on International Policy. Any errors in fact or interpretation should be attributed to the author and editors.

The conference and this report were made possible in part by a grant from the Carnegie Corporation of New York to the International Forum for Democratic Studies and grants from the Carnegie Corporation of New York, the General Service Foundation, and the James Irvine Foundation to the Pacific Council on International Policy. The funders do not take responsibility for any statements or views expressed in this document. The views expressed in this report do not necessarily represent those of the National Endowment for Democracy, the International Forum for Democratic Studies, or the Pacific Council on International Policy. Photocopies may be made. When using any part of this document, please cite the International Forum for Democratic Studies and the Pacific Council on International Policy. This report was produced by Debra Liang-Fenton, Conferences & Publications Coordinator of the International Forum.