| This thesis treats the evolution of institutions of governance and the process of economic development as interdependent. Economic freedom and political freedom, as two major aspects of the governance systems, are explicitly differentiated. Their distinctive impacts on economic growth are then assessed.; As the departure, log-linear methods are applied to categorical data containing economic freedom, political freedom, the level of income, and the rate of economic growth for a panel of about 100 countries from 1975 to 1992. The main results are: given economic freedom, the rate of economic growth is independent of political freedom and the level of income; given the level of income, political freedom is independent of economic freedom and the growth rate. The analysis suggests the fundamental effects of economic freedom in fostering economic growth, and a high level of income as the condition of a high degree of political freedom.; To evaluate effects of different aspects of freedom, we utilize a dynamic panel data model and GMM method to estimate a Solow model augmented with economic and political freedoms. The basic result is that economic freedom, but not political freedom, is important for economic growth.; To explore determinants of democratization, we apply cumulative logit models to various cross-country data sets in 1995. Positive effects of economic development on democratization are verified. Protestantism positively enhances the chance for political freedom, and Islam has the oppositive effects.; Findings from this thesis suggest that economic policies which are consistent with principles of a free market economy are good for economic growth. While these studies do not point to a positive role of political freedom in economic growth, neither do they support negative views about democracy in economic growth. This thesis does assert that economic development is an important requisite for political freedom. Therefore, one critical lesson we can learn from these studies is that policies which are good for economic development are fundamentally good for political development. |
