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Is Democracy Bad For Growth?

The time was July, 1959, and the place was the American exhibit in Moscow. Against a background of kitchen cabinets, U.S. Vice-President Richard Nixon and Soviet First Secretary Nikita Khrushchev sparred. Nixon extolled the prosperity that capitalism had brought to Americans and the freedom of choice and liberties that democracy gave them. Khrushchev retorted that socialist workers were happy and had everything they needed. Besides, he thundered, in seven years we shall surpass you.

Khrushchev was wrong. But was Nixon right? Does the American way of life ensure growth and prosperity? Is democracy the best way to achieve economic growth? In the former Soviet Union and Eastern Europe, in Latin America and Africa, even in Asia, where a few countries have yet to board the growth express, this has become one of the biggest issues of our time: What is the best political system for achieving economic growth and lasting prosperity?