Chapter 6 Regime Type and Economic Growth

6.1 Classical Modernization Theory

According to the classical modernization theory (Lipset 1959), development increases the likelihood of democratization (emergence) AND the likelihood of stable democracy (survival). Classical modernization theorists conceptualize development as industrialization, wealth, urbanization, and education.

6.2 Przeworski and Limongi (1993)

Przeworski, A. and Limongi (1993) introduce the debate on the relationship between democracy and development. Analyzing worldwide cases across time, Przeworski, A. and Limongi (1993) argue that politics does matter, but regimes do not capture the relevant differences in economic growth.

6.3 Przeworski et al. (2000)

Using empirical data from 1950 to 1990 with 135 countries worldwide, Przeworski et al. (2000) argue that exogenous holds, while endogenous fails. According to them, economic development does not cause democratization. Development merely helps sustain democracy once it is established.

6.4 Boix and Stokes (2003)

According to Boix and Stokes (2003), if the exogenous theory holds, development should not affect the emergence of democracy while development enhances the likelihood of democracy.

Thus, we need a theory in which development induces actors in democracies to sustain that system but does not induce actors in a dictatorship to change to democracy.

Boix and Stokes (2003) revisit modernization theory arguing that development make democratization more likely, and suggest endogenous theory of regime transition and survival.

6.5 Public Goods

A good that is both non-excludable and non-rivalrous.

• Public goods

  • Non-excludable: Individuals cannot be effectively excluded from use.

  • Non-rivalrous: Use by one individual does not reduce availability to others.

    • Example: Fresh air, knowledge, lighthouses, national defense.

• Private goods: Food, clothing, cars, personal electronics

• Common-pool goods: Fish stocks, timber, coal

• Club goods: Cinemas, private parks, satellite television

	Excludable	Non-excludable
Rivalrous	Private goods	Common-pool goods
Non-rivalrous	Club goods	Public goods

6.6 Collective action problem

Suppose human beings are rational, considering costs and benefits. Many individuals would all benefit from a certain action, but this is not happening because one’s action is costly.

Market failure

Market-like behavior of individual does not produce efficient results.

6.7 Olson (1993)

Olson (1993) assumes that no society can work satisfactorily if it does not have a peaceful order and other public goods as well. Thus, anarchic violence cannot be rational for a society. He introduces stationary bandit model, which shows the rational roving bandits settle down, wear a crown, and replace anarchy with government. According to Olson (1993), political leaders have low autonomy in democracy while autocrats have high autonomy. The extent of political leaders’ autonomy affect economy growth.

6.8 Concepts you should know

• credible commitment problem

• dependent variable

• independent, or explanatory variable

• modernization theory

• political resource curse

• survival story