Barro's latest GDP growth rate prediction fit

Harvard University economics professor Robert Barro, in his book

• Robert J. Barro: Determinants of Economic Growth: A Cross-Country Empirical Study, MIT Press, Cambridge MA 1997, ISBN=0-262-02421-7.

attempted to predict the annual GDP growth rate in a country from various facts about that country, based on least squares fitting to data. I emailed Barro to ask him for his scatterplot of country GDP-growth data, plus his fit of it to "democracy index" that is pictured on page 60 of his book. Barro replied in June 2006 that that data was 10 years old and here was his latest fit. The fit shows (see picture) that a country becomes better off economically (as measured by annual GDP growth rate, which increases additively by 2.6%) as its "democracy index of political rights" increases from 0 to 5.6 on an 0-10 scale. However, Barro finds that the GDP growth rate then decreases by 1.6% if the country is made still more democratic up to a maximum democratic rights level of 10. It appears that being "too democratic" is economically bad!

Details of Barro's latest fits are below. The two coefficients that determine the parabolic curve shown, are C(21) and C(22) where DEMOCDC1 is on an 0-1 scale (in the picture this has been redefined to be a 0-10 scale). Note their error bars are fairly small so these effects apparently are genuine. The curve has a peak and then curves back down, provided C(21)+2×C(22)<0. The statistical confidence that this is true (if we regard the two errors as uncorrelated), is about 97-98%.