Does the political regime favor economic growth? Experience from a primary-exporting price-taking economy

This study aims to analyze the influence of political regime on economic growth.

The methodology was based on an inter-period comparison of the evolution of macroeconomic fundamentals in three different political regimes in Ecuador, a South American country.

The results showed that what determines the evolution of macroeconomic fundamentals is not the political regime that oversees it, but the size of a positive exogenous shock on the price of raw materials, which, by providing higher incomes, considerably increases the level of investment and net exports. However, the political regime does affect the distribution of income in sectors such as health and education.

As far as the authors know, this may be the first paper to explore the importance of a positive exogenous shock on a political regime for the case of primary-exporting Latin American economies, which are price takers subject to exogenous shocks.