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The economic determinants of democracy and dictatorship - Classic modernization theory

4 important questions on The economic determinants of democracy and dictatorship - Classic modernization theory

Modernization theory argues that all societies pass through the same historical stages of economic development. It predicts that economic development will help both:

The emergence of democracy and the survival of democracy.

Przeworski's survival story predicts that:

Democracy is more likely to survive as countries develop and become richer, but is not more likely to emerge. Most wealthy people prefer to stay in democracies (instead of risking not being friends with the dictator), while poor people have nothing to lose. The process by which a country becomes democratic may be unknowable, but if actors find themselves in a democracy, then the level of income will influence whether they stay in a democracy.

Purchasing power parity (PPP) calculates:

The price of particular bundle of goods in each country using each country's local currency. The most PPE exchange rate compares goods in each country with the United States, resulting in a PPP US dollar exchange rate.

Two critical implications allow us to distinguish between modernization theory and the survival theory:

The frequency of regime transitions in general

Pr (Regime Transition | Income level) = # transitions to democracy/dictatorship / # country years

The effect of increased income on the probability of democratic transitions in particular

Pr (Transition to Democracy | Income level) = # transitions to democracy / # dictatorial country years
-> evidence suggests that the observed world looks more like the one envisioned by modernization theory than the one envisioned by the survival story.