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Consensual and Conflictual Democratization

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  • Cervellati, Matteo

    () (University of Bologna)

  • Fortunato, Piergiuseppe

    () (UNCTAD)

  • Sunde, Uwe

    () (University of Munich)

Abstract

We study the process of endogenous democratization from inefficient oligarchic systems in an economy where heterogeneous individuals can get involved in predation activities. The features of democracies are shown to be crucially related to the conditions under which democratization initially takes place. The political regime and the extent of redistribution implemented under it depend on the allocation of de facto political power across the different social groups. The cost of public enforcement of property rights depends on the extent of predation activities in the economy. The theory highlights the importance of inequality in natural resources and availability of human capital for endogenous democratic transitions. Multiple politico-economic equilibria can be sustained conditional on expectations about property rights enforcement. This generates history dependence. Democratic transitions supported by a large consensus serve as coordination device and lead to better protection of property and more stable political systems than democratic transitions imposed in conflictual environments. We test the novel predictions using available cross-country data. The link between the type of democratic transition and the outcomes under democracy is also investigated using novel data on constitutional principles. The findings support the theoretical predictions.

Suggested Citation

  • Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2006. "Consensual and Conflictual Democratization," IZA Discussion Papers 2225, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2225
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    Cited by:

    1. Lagunoff, Roger, 2009. "Dynamic stability and reform of political institutions," Games and Economic Behavior, Elsevier, vol. 67(2), pages 569-583, November.
    2. Jinhui H. Bai & Roger Lagunoff, 2011. "On the Faustian Dynamics of Policy and Political Power," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 17-48.
    3. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2011. "Democratization and Civil Liberties: The Role of Violence During the Transition," Economics Working Paper Series 1108, University of St. Gallen, School of Economics and Political Science.
    4. Roger Lagunoff (Georgetown University), 2005. "Markov Equilibrium in Models of Dynamic Endogenous Political Institutions," Working Papers gueconwpa~05-05-07, Georgetown University, Department of Economics.
    5. Buchheim, Lukas & Ulbricht, Robert, 2014. "Dynamics of Political Systems," TSE Working Papers 14-464, Toulouse School of Economics (TSE), revised May 2016.
    6. Gradstein, Mark, 2007. "Institutional Traps and Economic Growth," CEPR Discussion Papers 6414, C.E.P.R. Discussion Papers.
    7. Cervellati, Matteo & Fortunato, Piergiuseppe & Sunde, Uwe, 2014. "Violence during democratization and the quality of democratic institutions," European Economic Review, Elsevier, vol. 66(C), pages 226-247.
    8. Uwe Sunde, 2006. "Wirtschaftliche Entwicklung und Demokratie - Ist Demokratie ein Wohlstandsmotor oder ein Wohlstandsprodukt?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 7(4), pages 471-499, November.
    9. Roger Lagunoff, 2004. "The Dynamic Reform of Political Institutions," Econometric Society 2004 Latin American Meetings 47, Econometric Society.
    10. Kotschy, Rainer & Sunde, Uwe, 2017. "Democracy, inequality, and institutional quality," European Economic Review, Elsevier, vol. 91(C), pages 209-228.
    11. Piergiuseppe Fortunato, 2015. "Democratic Government and Development: A Survey," Asian Development Review, MIT Press, vol. 32(2), pages 153-177, September.
    12. Matteo Cervellati & Piergiuseppe Fortunato & Uwe Sunde, 2008. "Hobbes to Rousseau: Inequality, Institutions and Development," Economic Journal, Royal Economic Society, vol. 118(531), pages 1354-1384, August.
    13. Gradstein, M., 2007. "Institutional Traps and Economic Growth," Cambridge Working Papers in Economics 0769, Faculty of Economics, University of Cambridge.
    14. Buchheim, Lukas & Ulbricht, Robert, 2014. "Emergence and Persistence of Extreme Political Systems," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 461, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

    More about this item

    Keywords

    oligarchy; conflict; consensual democracy; inequality; commitment; constitutional principles; democratization;

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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