Abstract
The modernization hypothesis attributes democracy to higher incomes. The hypothesis has been controversial with claims of no relationship or opposite causality. Using data on a large sample of countries over the period from 1995 to 2015, we show empirically that the hypothesis is valid by studying the role of diversified production and interest-group competition. Production diversification increases incomes and is associated with emergence of competing organized interest groups representing the different diversified sectors. The interest-group competition underlies democracy by restraining rent seeking for benefits that would otherwise be sought through single-decision-maker authoritarian government.
| Original language | English |
|---|---|
| Article number | 101929 |
| Journal | European Journal of Political Economy |
| Volume | 65 |
| Early online date | 14 Aug 2020 |
| DOIs | |
| Publication status | Published - Dec 2020 |
Keywords
- Interest groups
- Modernization
- Production diversification