The Connection Between Systems of Government & Economic Prosperity
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This paper explores the relationship between democracy and economic prosperity across the world. We use data from the EIU Democracy Index as a benchmark for each country’s level of democracy, and the World Bank’s Gross Domestic Product (GDP) per Capita Index as a measure of wealth. Additionally, we include each country’s average inflation over the past ten years, foreign direct investment (FDI), Gini coefficient, savings as a percent of gross national income, and unemployment rate as secondary explanatory variables to help determine the underlying relationship. A positive correlation between EIU Democracy Index levels and GDP per capita is hypothesized, which is supported by the regression analysis performed.