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The economic determinants of democracy and dictatorship - A variant of modernization theory

7 important questions on The economic determinants of democracy and dictatorship - A variant of modernization theory

One common criticism of classic modernization theory is that is lacks a strong causal mechanism and that it simply relies on an empirical correlation between income and democracy. A variant of modernization theory that helps to show why some rulers limit their extractive activity and others do not, states that:

It is not income per se that encourages democracy but rather changes in the socioeconomic structure of a country that accompany economic development.

Sovereign debt creates a credible commitment problem (or a time-inconsistency problem), thus occurs when:

a) an actor who makes a promise today may have an incentive to renege on that promise on the future and;

b) power is in the hands of the actor who makes the promise and not in the hands of those expected to benefit from the promise.

Society has developed at least three ways to deal with credible commitment problems:

Enforceable contracts
Repeated interactions
Institutions that alter the distribution of power

This variant of modernization theory also provides an explanation for the political resource curse, which states that:

Countries that rely heavily on revenue from natural resources (naturally occurring substances that are usually considered valuable) are unlikely to democratize. They are also prone to corruption, poor governance and civil war.

The political resource curse has both demand and supply side explanations:

Demand-side explanations emphasize how resource revenues reduce both the citizen's demand for democratic reform (government won't raise taxes because they have other sources of income) and government responsiveness to that demand (government is autonomous from the citizens).
Supply-side explanations focus on how resource revenues enable dictators to resist pressure to democratize and help them to consolidate their hold on power (easier to silence opposition with money).

Foreign aid will promote democratization only when:

The recipient country is dependent on foreign aid
The aid donor wants to promote democratic reform in the recipient country
The aid donor can credibly threaten to withdraw aid if its demands for reform are not met (the extent to which aid donors can enforce their conditions for democratic reform depends on whether they have credible exit threats).

-> if any of these conditions do not hold, then we can expect foreign aid to hinder democratization efforts (in the same way as income from natural resources, both represent unearned income that increase the autonomy of governments relative to its citizens).

The basic argument is that inequality produces political competition between the rich and the poor. However, the variant on modernization theory states that:

Economic inequality should be bad for democracy only in countries where the economic elites have immobile assets and therefore lack credible exit threats. In countries where they have mobile assets, the elites should be willing to accept democracy safe in the knowledge that the poor will have incentive to curb their demands for redistribution (they rely on the elites for economic growth).

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The question on the page originate from the summary of the following study material:

Principles of Comparative Politics | 9781506318141 | William Roberts Clark, et al

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The economic determinants of democracy and dictatorship - A variant of modernization theory

7 important questions on The economic determinants of democracy and dictatorship - A variant of modernization theory

Sovereign debt creates a credible commitment problem (or a time-inconsistency problem), thus occurs when:

Society has developed at least three ways to deal with credible commitment problems:

This variant of modernization theory also provides an explanation for the political resource curse, which states that:

The political resource curse has both demand and supply side explanations:

Foreign aid will promote democratization only when:

The basic argument is that inequality produces political competition between the rich and the poor. However, the variant on modernization theory states that:

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