Méon, P-G & Khalid Sekkat (Université libre de Bruxelles, Centre Emile Bernheim de Recherche Interdisciplinaire en Gestion), 2019-2021

We study the impact of democratic transitions on institutional outcomes. Using an event study method and a sample of 135 countries over the period 1984-2012, we observe that democratic transitions improve institutional outcomes. The effect appears in the three years following the transition year. The results are robust to alternative definitions of transitions, alternative codings of pre- and post-transition years, changing the set of control variables, and using instrumental variables, which suggests that the effect is causal. We also find that both full and partial democratizations improve institutional outcomes. Transitions out of military regimes or communist autocracies do not. The effect of democratization depends on GDP per capita, education, and the regularity of the transition. Finally, the evidence suggests that the effect is particularly strong on the law and order, internal conflict, government stability, and ethnic tensions dimensions of the index.

Keywords: Democratization; democratic transitions; institutions; governance; political risk.