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Reevaluating the modernization hypothesis

Author

Listed:
  • Acemoglu, Daron
  • Johnson, Simon
  • Robinson, James A.
  • Yared, Pierre

Abstract

We revisit and critically reevaluate the widely accepted modernization hypothesis which claims that per capita income causes the creation and the consolidation of democracy. Existing studies find support for this hypothesis because they fail to control for the presence of omitted variables. Controlling for these factors either by including country fixed effects in a linear model or by including parameterized random effects in a nonlinear double hazard model removes the correlation between income and the likelihood of transitions to and from democratic regimes. In addition, the estimated fixed effects from the linear model are related to historical factors that affect both the level of income per capita and the likelihood of democracy in a country. This evidence is consistent with the idea that 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.

Suggested Citation

  • Acemoglu, Daron & Johnson, Simon & Robinson, James A. & Yared, Pierre, 2009. "Reevaluating the modernization hypothesis," Journal of Monetary Economics, Elsevier, vol. 56(8), pages 1043-1058, November.
  • Handle: RePEc:eee:moneco:v:56:y:2009:i:8:p:1043-1058
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    References listed on IDEAS

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    More about this item

    Keywords

    Democracy Economic growth Institutions Political development;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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