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Working Paper #43

The Demand for Democide
An Instrumental Variables Analysis


     
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Abstract: While there has been much written about the relation between savings or investment and contract enforceability or the expropriation of wealth, less has been written about the relationship between government violations of physical rights and savings or investment. This is unfortunate because recent work by Rummel [1994, 1997] has shown that there is a strong relationship between the amount of absolute power held by a government and the number of people killed by that government. He has also provided a rich data set documenting the number of deaths by 'democide', defined as killing by government. Scully's [1997] is an exception, in that he has tried to relate democide to economic growth rates. He shows in a simple regression that a one-percent increase in real per capita GDP "buys" a 1.4-percent drop in the rate of democide. But this begs a question Scully leaves unanswered -- does democide cause lower growth, or does lower growth lead to democide? In this paper I address that problem, and attempt to extend the economic growth literature by showing how democracy and autocracy may connect to savings rates through human safety.






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