Does democracy drive income in the world, 1500-2000?

Using data for political regimes, income and human capital for a sample of 141 countries over the periods 1820-2000 and 1500-2000, this research examines the income and growth effects of democracy when human capital, among other key variables, is controlled for. Linguistic distance-weighted foreign democracy is used as an instrument for domestic democracy. Democracy is found to be a significant determinant of income and growth and the result is robust to various estimation methods and covariates. We find that a one-standard deviation increase in democracy is associated with a 44-98% increase in per capita income.