Reevaluating the modernization hypothesis
By: Daron Acemoglu ... [et al.].
Contributors: Johnson, Simon, 1963-; Robinson, James A., 1960-; Yared, Pierre; Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 07-23; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 07-23.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2007
Place of publication: Cambridge, MA
Language: eng
Number of pages: 31
Subjects: Econometric models; Democracy; Income; Democratization; Political aspects; Economic development; Cost and standard of living
Description: This paper revisits and critically reevaluates the widely-accepted modernization hypothesis which claims that per capita income causes the creation and the consolidation of democracy. We argue that existing studies and support for this hypothesis because they fail to control for the presence of omitted variables. There are many underlying historical factors that affect both the level of income per capita and the likelihood of democracy in a country, and failing to control for these factors may introduce a spurious relationship between income and democracy. We show that controlling for these historical factors by including fixed country effects removes the correlation between income and democracy, as well as the correlation between income and the likelihood of transitions to and from democratic regimes. We argue that this evidence is consistent with another well-established approach in political science, which emphasizes how events during critical historical junctures can lead to divergent political-economic development paths, some leading to prosperity and democracy, others to relative poverty and non-democracy. We present evidence in favor of this interpretation by documenting that the fixed effects we estimate in the post-war sample are strongly associated with historical variables that have previously been used to explain diverging development paths within the former colonial world.
Notes: Statement of responsibility reads: Daron Acemoglu, Simon Johnson, James A. Robinson, Pierre Yared.

"August 2007."

Includes bibliographic reference (p. 28-31).

Abstract in HTML and working paper for download in PDF available via World Wide Web at the Social Science Research Network.