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Reconsidering the modernization hypothesis: The role of diversified production and interest‐group competition

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  • Pittaluga, Giovanni B.
  • Reghezza, Alessio
  • Seghezza, Elena

Abstract

The modernization hypothesis attributes democracy to higher incomes. The hypothesis has been controversial with claims of no relationship or opposite causality. Using data on a large sample of countries over the period from 1995 to 2015, we show empirically that the hypothesis is valid by studying the role of diversified production and interest-group competition. Increases in income associated with production diversification foster the emergence of competing organized interest groups representing the different diversified sectors. The interest-group competition underlies democracy by restraining rent seeking for benefits that would otherwise be sought through single-decision-maker authoritarian government.

Suggested Citation

  • Pittaluga, Giovanni B. & Reghezza, Alessio & Seghezza, Elena, 2020. "Reconsidering the modernization hypothesis: The role of diversified production and interest‐group competition," European Journal of Political Economy, Elsevier, vol. 65(C).
  • Handle: RePEc:eee:poleco:v:65:y:2020:i:c:s017626802030077x
    DOI: 10.1016/j.ejpoleco.2020.101929
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    More about this item

    Keywords

    Modernization; Production diversification; Interest groups;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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