Democratic governments tend to spend more on healthcare and education than authoritarian regimes do, according to an MIT study that used data from 184 countries.
The study, published in the Journal of Political Economy, also found that countries switching to democratic rule experience a 20 per cent increase in gross domestic product (GDP) over a 25-year period, compared to what would have happened had they remained authoritarian states.
Democracies employ broad-based investment, especially in health and human capital, which is lacking in authoritarian states, the researchers found.
"Many reforms that are growth-enhancing get rid of special favours that nondemocratic regimes have done for their cronies. Democracies are much more pro-reform," said Daron Acemoglu from the Massachusetts Institute of Technology (MIT) in the US.
"Democracies do a lot of things with their money, but two we can see are very robust are health and education," Acemoglu said in a statement.
The researchers examined 184 countries in the period from 1960 to 2010.
During that time, there were 122 democratisations of countries, as well as 71 cases in which countries moved from democracy to a nondemocratic type of government.
The study focused precisely on cases where countries have switched forms of rule.
That is because simply evaluating growth rates in democracies and nondemocracies at any one time does not yield useful comparisons, researchers said.
They also found that countries that have democratised within the last 60 years have generally done so not at random moments, but at times of economic distress.
That sheds light on the growth trajectories of democracies: They start off slowly while trying to rebound from economic misery.
"Dictatorships collapse when they are having economic problems," Acemoglu said.
As for the underlying mechanisms at work in the improved economies of democracies, Acemoglu noted that democratic governments tend to tax and invest more than authoritarian regimes do, particularly in medical care and education.
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