The Political U: New Evidence on the Economic Costs of Hybrid Regimes

Recent research establishes a positive causal effect from democracy to income, although this evidence relies mostly on binary regime classifications. We extend the identification framework of Acemoglu et al. (2019) to a classification that distinguishes democracies, autocracies, and hybrid regimes for about 170 countries over 1960-2024. We find hybrid regimes generate approximately 20 percent lower GDP per capita than either alternative, robust to a wide range of estimators, measures, and specifications. This effect is not a transition penalty, supporting the view that hybrid regimes are a durable institutional equilibrium with sustained economic costs rather than a simple transitional phase.