"Skepticism about the performance of democratic institutions is as old as democracy itself. Plato, for example, denigrated democracy as the second worst form of government after tyranny. The view that democracy is a constraint on economic growth has recently been gaining ground. In this paper, we show that once the dynamics of GDP are controlled for in a fixed effects OLS regression, there is an economically and statistically significant positive correlation between democracy and future GDP per capita. This result remains true in GMM estimates that account for any bias due to lagged dependent variables, as well as with semi-parametric estimators based on a propensity score for democratic transitions estimated using past lags of log GDP. Our preferred specifications imply that long-run GDP increases by about 20% following a democratic transition."