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The Political Economy of Heterogeneous Development: Quartile Effects of Income and Education

  • Marcus Alexander

    (Harvard University)

  • Matthew Harding

    ()

    (Department of Economics, Stanford University)

  • Carlos Lamarche

    (Universidad Nacional de La Plata)

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    Does development lead to the establishment of more democratic institutions? Over the past 50 years, the countries have illustratred two very distinct stages of political development—authoritarian states with low levels of freedom on one side and democracies with liberal institutions on the other. We develop a new empirical strategy that allows for the first time to estimate the effects of development as well as changing unobserved country effects in driving democracy at these different stages of political development. We find income and education have the least effect on democracy when authoritarian regimes are consolidated and only changing country effects can lead to political development. Ironically, it is in highly democratic and wealthy nations that income and education start to play a role; however greater wealth and better educated citizenry can both help and hurt democracy depending again on what the country’s institutional legacies are. Far from accepting the notion that much of the developing world is cursed by unchanging and poor long-run institutions, policy-makers should take note that with democratization we also see changing country-specific factors that in turn condition the difference income and education can make for democracy.

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    File URL: http://www-siepr.stanford.edu/repec/sip/07-052.pdf
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    Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 07-052.

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    Date of creation: Aug 2008
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    Handle: RePEc:sip:dpaper:07-052
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    1. Joel L. Horowitz, 1998. "Bootstrap Methods for Median Regression Models," Econometrica, Econometric Society, vol. 66(6), pages 1327-1352, November.
    2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
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