Although empirical studies on the relationship between civil and political rights and economic development are far from conclusive, many of them find that freedom in all its economic, civil and political dimensions tends to favor economic growth and stability. Burkhart and Lewis-Black (1994) provide support to Lipset (1959)’s hypothesis that increasing income rises the probability of a country choosing a democratic system. The mechanism of this linkage is through a growing middle class and social mobility created by economic growth, which in turn leads to growing demand for political rights and civil liberties. Calderón (2000) shows that improvements in the institutional framework have a positive influence on economic growth, especially in poor countries. Sah (1991) observes that authoritarian regimes exhibit a larger variance in economic performance than democracies, while Isham and others (1997) find that substantial violations of civil and political rights are related to lower economic growth. More recently, Blume and Voigt (2005), using a comprehensive set of human rights data, show that high levels of economic freedom and civil and political rights are significantly conducive to economic growth and welfare. None of the four groups of rights they use is ever found to have a significant negative impact on their various economic variables: basic human rights and property rights are conducive to investment, while property rights, civil rights and emancipatory rights are found to have a discernible impact on productivity gains. In their survey on economic freedom, Hanke and Walters (1997) conclude that while both economic freedom and civil and political freedom contribute significantly to prosperity, gains in economic freedom have a “prosperity dividend” that is three to six times greater than that which would be obtained from comparable gains in civil and political freedom. In their more recent empirical survey, de Haan, Lundström and Sturm (2006) note that political liberalization is often found to enhance economic liberalization, whereas there is less evidence for causality running in the other direction.

Looking more directly at the effect of democratization, Barro (1997) observes that democracy has a nonlinear effect on growth. Any increase in political rights initially increases growth, but this tends to ease off once a certain level of democracy is attained. His own interpretation of these results is that, in the strictest dictatorships, increased freedom stimulates growth by limiting government abuse. But after achieving some degree of political freedom, further increases in democracy hinder growth by intensifying the redistribution of resources. Tavares and Wacziarg (2001) find that democracy hinders growth because it reduces investment in physical capital and raises the ratio of public consumption to GDP. Aixalá and Fabro (2008) refer to three schools of thought: the “conflict perspective” where the appearance of certain pressure groups in a democracy makes it difficult to carry out reforms; the “comparability perspective” where only a democracy can give credibility to property rights protection, which are key to development and finally “the skeptical perspective” which states that the presence of political freedom alone does not necessarily lead to economic growth. Some empirical studies find that liberalizing the economy is an essential first step before the enhancement in political rights can generate growth (Giavazzi and Tabellinini, 2005, Persson and Tabellinini, 2006). Democracies created in closed economies are forced to face conflicts of redistribution, while democracies introduced in open economies lead to more efficient economic outcomes.

Not only does the impact of civil rights and political liberties on economic growth seem more equivocal than the impact of economic freedom, but the causal relationship also seems more ambiguous. Vega9