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Abstract: This paper examined whether a significant difference in economic growth exists between constitutional monarchies and republics. A review of political economy philosophies does indicate that government is the foundation of economic development. However the type of government that best nurtures economic growth remains contentious. The paper inclines on political economy philosophies of John Locke and Thomas Hobbes and blends with the capital growth theory of Milton Friedman. The paper applied a theoretical review and a brief empirical analysis approach. This paper contributes by providing empirical support to anecdotal assertions that economic growth may not only depend on government type (constitutional monarchy or republic), but on the efficacy of government. In addition, whilst previous researchers have largely used time series data, this paper brings a nuance by using cross sectional data, which is devoid of fluctuations. Data from forty eight countries of the world were used to compare democracy and monarchy regimes with their levels of economic growth measured by GDP per capita. Applying both Chi-square, t-test of difference and graphical analysis, results show a P-value of more than 0.05 in both the Chi-square and t-test statistics, which provides an empirical support of lack of significant relationship between governance type (constitutional monarchy or republic) and economic growth. Albeit lack of significance, the ‘mean GDP’ is slightly higher for monarchy countries than in republic countries. Similarly, the variance statistic (a measure of instability) is lower for constitutional monarchies and higher for republics, indicating that constitutional monarchies appear more economically stable than republic countries. Based on the findings, the paper provides a framework for further research. It also recommends future research agenda to explore this phenomenon by including absolute monarchies and autocratic regimes in an empirical setting and to use a current cross sectional data devoid of fluctuations. The paper provides practical recommendation that being a republic is not a sufficient panacea for economic growth if the excesses that retard growth are left unbridled, these includes inter alia undue interference that obscures economic certainty for investors. Keywords: Democracy, economic growth; economic stability, monarchy and Republic. |
