New Insights on the Relationship Between Democracy and Wealth

Do the chances of democracy’s success in Egypt, Libya, Tunisia, or Myanmar depend on each country’s wealth? And does China’s growing prosperity portend a democratic transition there anytime soon?

Scholars have debated for decades whether economic development also brings democracy. In 1959, Seymour Martin Lipset penned a famous paper arguing that economic growth spawns democracy, leading to an entire field of research called “modernization theory.” Indeed, most high-income countries today are democracies, although there are clear exceptions--like Singapore and the oil-rich countries of the Persian Gulf.

In my recent book (co-edited with Isobel Coleman), Pathways to Freedom: Political and Economic Lessons From Democratic Transitions, we find that economic growth and prosperity do not necessarily lead to democracy. However, once democracy blossoms for other reasons, higher income levels and the presence of a solid middle class can prevent backsliding to authoritarianism. As Jan Teorell (author of a chapter in our book on statistical evidence) argues, in late-twentieth century democratizations (the so-called third wave of democracy), the main tendency was not for “modernizing” countries to democratize but for more modernized ones to avoid reversions to autocracy. This builds on the earlier work of some scholars who argue that high GDP does not precipitate transitions to democracy but instead predicts whether democracy, however it arose, is sustained. Poland, one of democracy’s biggest success stories of recent years, had to overcome a daunting legacy after the Soviet Union’s collapse. But its relatively equal income distribution, well-educated labor force, and diversified economy, which underpinned a vibrant and engaged middle class, helped ensure that Poland’s fragile democracy soon grew strong roots.

This is not to imply that democracy necessarily requires that countries first enjoy a certain level of income before pursuing political freedom. Even if higher income levels help democracy endure, democracy is by no means impossible in low-income countries. Indeed, Amartya Sen famously argued that democracy can actually lead to the realization of other aspects of development, such as economic growth—an argument echoed by a range of scholars in recent years. However, it is clear that the more countries like Egypt can do foster inclusive economic well-being and build a strong middle class, the better their chances of sustaining democratic advances. This is a difficult task even in the best of times; triply so given the turbulence transitioning countries face today.

But those interested in nurturing democracy around the world would do well to note that although economic growth alone is unlikely to bring political freedom, the chances of successful democratization are vastly improved by the presence of a large and vibrant middle class. This is one more reason to pursue inclusive and sustainable growth strategies (like export manufacturing) that raise all boats, rather than investments in sectors (like extractive industries) that can vastly increase a country’s wealth but leave most people behind.

For more on the factors behind the successes and challenges of democratic transitions, see Pathways to Freedom: Political and Economic Lessons From Democratic Transitions.