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BackgroundThe development-democracy-growth hypothesis has received much attention from social scientists. The literature concerned with the level of economic development and prevalence of democratic institutions specifies a causal flow from the former to the latter. Whereas, the literature dealing with the relationship between the rate of economic growth and democratic character of political institutions assumes a causal flow from the latter to the former. The hypothesized development-democracy-growth relationship demonstrates that the level of economic development determines the type of political institutions and the type of political institutions impacts the rate of economic growth. In most studies, empirical evidence establishes only correlations and not causal relations. Correlation analysis can only indicate the existence of causal connection. It cannot, however, determine the direction of causation. The causal relationships between development and democracy and democracy and growth are the focus of the present study. The relative importance of a set of preconditions as well as a number of supporting variables for the establishment of political democracy and its association with economic growth are analyzed and empirically examined.A historical evaluation of the political economy of development in the Third World during the past three decades can clearly reveal that (1) a peopleoriented development strategy, which improves the quality of human life for the largest segment of the population, requires mass participation in the decision making process and thereby creates conditions for the emergence of democratic institutions and (2) the installment of authoritarianism is made possible at too high a human cost and an enormous waste of vital resources in an attempt to establish a 'social cement' and maintain the 'status quo'. Consequently, I shall doubt the validity of a highly publicized thesis that 'the political economy of development poses a cruel choice between rapid (self-sustain) expansion and democratic processes' (Bhagwati, 1966: 203-204). My assessment is based mainly on the social, economic, and political performance of a number

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descriptive results suggest that, overall, African economies have experienced similar growth trends, which are higher in the 1970s than the 1980s. However, contrary to previous studies, disaggregated comparison of the CFA with the SSA indicate that no significant growth differences exist between these economies. Moreover, our empirical findings suggest that monetary expansion and capital formation have positive impacts on output growth, whereas inflation, and government spending show negative effects. In sum, although participating in a monetary union has not necessarily resulted in faster output growth, it has enabled the CFA countries to better control price fluctuations and monetary expansion.

In this paper we argue that the relationship between inflation and the accuracy of inflation predictions in high‐inflation countries, such as those in Latin America, is ambiguous. Several empirical studies have measured a positive link between the level of inflation and its variability, suggesting that inflation uncertainty rises with the level of inflation. Others have noted, however, that variability measures may not capture uncertainty and that the evidence on a positive relationship between inflation and its uncertainty is weak. In fact, the relationship could, in principle, be negative and we present here some evidence from Latin America that supports partially this latter view. The reason for the potentially negative effect of inflation on inflation uncertainty is that in a high‐inflation environment economic agents invest more resources in generating accurate inflation forecasts and in developing instruments capable of reducing the uncertainty costs of high inflation. In general, however, there is no clear relationship between inflation and its predictability.