Are democratic governments more efficient?

This paper explores the relationship between public sector efficiency (PSE) and the level of democracy, both theoretically and empirically. At the theoretical level a simple model of elections with two time periods is presented, which takes into account whether the political regime is democratic or not. Specifically, it is assumed that elected officials in democracies are 'more' accountable to voters than the respective ones in autocracies.

This mechanism induces the democratic politicians to produce the public good in a more efficient way, in order to remain in power.

The researchers examine the effect of democracy on PSE for a dataset of 50 developing and developed countries over a 20 year period, from 1980 - 2000. The results suggest that the relationship between PSE and democracy is positive and statistically significant, thus confirming the theoretical priors.

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