When democracy delivers: Threshold effects in governance quality

Abstract

This study investigates the relationship between democratic institutionalization and governance quality through a measurement-oriented approach using a panel dataset of 146 countries from 2013 to 2023. Drawing on democracy scores from the Economist Intelligence Unit (EIU) and governance indicators from the Worldwide Governance Indicators (WGI), the analysis examines how variations in democratic development correspond to changes in six dimensions of institutional performance. Although both datasets assess aspects of political institutionalization, they originate from distinct conceptual frameworks, the EIU focusing on electoral and participatory dimensions of democracy, and the WGI emphasizing administrative and legal governance outcomes. Fixed-effects and piecewise regression analyses reveal that governance improvements accelerate beyond mid-range democracy levels, suggesting a threshold effect in institutional performance. Bootstrap confidence intervals confirm the robustness of these non-linear patterns. These findings contribute to the literature on institutional quality by clarifying the empirical linkages and distinctions between democratic development and governance, demonstrating that their alignment reflects co-evolving, but not redundant dimensions of political modernization.