Democrats, Dictators, and Demonstrators

1. INTRODUCTION A sizable amount of recent empirical literature has focused on the relation between democracy and economic growth. However, most of these papers, such as Barro (1996), Helliwell (1994), and the studies summarized in Przeworski and Limongi (1993), concentrate on the relationship between levels of democracy and economic growth. This article focuses on the relationships among democratic movements, governmental responses to these movements, and economic growth. Democratic movements provide a distinct perspective from analyzing the relationship between levels of democracy and economic variables. Democratic movements by definition focus on collective action and are reflective of the wishes of large segments of society, whereas many actual changes in democracy occur through behind-the-scenes maneuvers of political elites (sometimes, but not always, in response to popular movements). (1) Additionally, a democratic movement can fail if repression of the movement succeeds, as in Burma (now Myanmar) in 1988 and China in 1989. In these and other repressed movements, although a large segment of society has expressed a desire for a more democratic form of government, the existing government has indicated that it is prepared to resist those demands. This tension between the actual level of democracy and the level desired by citizens presumably has economic consequences in addition to the consequences of the actual level of democracy. Of course, repression is not the only outcome of democratic movements: for example, democratic movements in Eastern Europe in 1989-90 (with the partial exception of Romania) led to concessions and democratic reforms by the governments involved. The focus of this article includes both repressed and successful democratic movements, as well as democratic transitions that occurred without widespread democratic movements. In this article I provide an enhanced version of the data set of democratic movements in Minier (2001), incorporating a classification of the government's response to each movement. Using these data, I address two main questions. First, what are the effects of a democratic movement on the economy? Specifically, how does a democratic movement affect economic growth, and, given that a democratic movement has occurred, what are the economic ramifications of a government's response to that movement? In particular, does the choice of repression versus concessions affect subsequent growth? Second, democratic transitions do not always require a widespread democratic movement. How do subsequent economic conditions differ between countries that become democratic through a democratic movement and countries in which no movement occurs? (2) II. BACKGROUND Democratic movements relate to both political instability and democracy. Previous empirical studies have established that political instability is negatively correlated with economic growth, and that the level of democracy is positively correlated with income levels, although the relationship between democracy and growth is more ambiguous. (3) The related theoretical literature has focused on the probability of success for a revolution or insurrection more generally, as in Grossman (1991) and Roemer (1985), or the probability that a government grants democratic concessions, as in Rosendorff (2001) and Acemoglu and Robinson (2000). Political instability can be measured in a number of ways. Londregan and Poole (1990) use whether or not a coup d'etat occurs; Alesina et al. (1996) expand this to include constitutional changes. General economic growth studies that include a measure of political instability, such as Barro (1991), generally use some combination of the average number of revolutions, coups, and political assassinations. In this article, I provide additional insight into the relationship between political instability and economic growth by investigating a distinct form of political instability: democratic movements. …