ABSTRACT
This chapter identifies the main themes that have emerged in economics. The principal focus is on the developing countries, but with some references to the literatures for the developed and transition countries. Empirical growth economics has been a highly active field over the last decade or so, albeit replete with methodological controversies. Economists typically investigate democracy’s growth effects on cross-sections of countries by regressing growth on its possible determinants – usually physical and human capital, population growth, openness to trade, macroeconomic policy, and measures of institutional quality – including indices of democracy. The human capital created by education can be an important source of economic growth. Saint-Paul and Verdier argue that democracy leads to redistribution through greater education spending, thereby raising human capital, labour productivity, and growth. Economic theory is based on the premise that individuals seek to maximize their well-being subject to their constraints.
