Investigating the Relation between Improving Democracy and Per Capita Income in Oil-Exporting and Industrial Countries

This paper investigates under what conditions improving democracy increases per capita income and under what conditions that decreases per capita income. Econometric analysis of cross section data is applied to answer the question of the paper. In econometric section of the paper، the effect of democracy on per capita income of G20 countries is compared with the effect of it on per capita income of oil-exporting countries. Our results show that in countries in which the good performance of economic and political institutions is visible، improving democracy will strengthen the good performance of institutions and increase per capita income، but in countries in which the performance of institutions is bad and in support of rent-seeking activities، improving democracy will exacerbate the bad performance of institutions and decrease per capita income.