Does sovereignty help economic growth? A recent reassessment

Abstract

There is relevant literature that has found that independence harmed economic growth in some former colonies, but there are few to no systematic and recent empirical analyses on the relationship between sovereignty and economic growth. We follow and enhance the Solow–Swan growth model to measure economic convergence with the United States. This model was estimated through feasible generalized least squares panel regressions and robust regressions. These estimations allow us to capture the experience of recent (since the 1950s) sovereignties vis-à-vis long-existing countries and the economic outcomes of democratic sovereignties. We then stratify economies by region and income level and show propensity score matching estimators of recent former colonies with other countries that share similar growth determinants. On average, our parameter estimates suggest that independence causes countries’ per capita income to converge with that of the United States. Initial democratic and economic conditions appear to be among the modifying factors between sovereignty and economic growth.