Economic and Social Factors Driving the Third Wave of Democratization

London Business School Economics Working Paper No. DP 2004/21

79 Pages Posted: 20 Jul 2004

See all articles by Elias Papaioannou

Elias Papaioannou

London Business School; Centre for Economic Policy Research (CEPR)

Gregorios Siourounis

London Business School

Date Written: May 2004

Abstract

During the last three decades the world has experienced an unprecedented wave of democratization (the 3rd Wave). Employing various probabilistic panel models, we test traditional and recent political economy theories on the prerequisites for democracy in their natural field: in those countries that enter our sample as non-democracies. Examining initially autocratic countries is not only more theoretically compelling than estimating long-run correlations in all countries, but also enables us to address issues of sample selection (at the beginning of the sample the most economically developed countries were democratic) and reverse causality (democracy can be both a cause and a consequence of wealth). We quantify the driving factors that not only explain why some countries abandoned non-representative government, but factors that explain the timing of the transition. Our estimates reveal that democratization is more likely to occur: a) in relatively affluent and educated societies, b) in countries that are open to international trade and/or have recently implemented trade liberalization policies, c) after a crisis and d) after the end of an armed conflict. Democratization is less likely to emerge and consolidate in e) religiously heterogeneous countries, f) countries with an abundance of natural resources. We also find considerable support for endowment theories of political development that stress the role of colonization, the disease environment and early institutions in shaping the polity. These results are robust to alternative definitions of democratization, additional socioeconomic controls and alternative estimation techniques.

Keywords: Democratization, income, inequality, education

JEL Classification: O40, C30, E60

Suggested Citation

Papaioannou, Elias and Siourounis, Gregorios, Economic and Social Factors Driving the Third Wave of Democratization (May 2004). London Business School Economics Working Paper No. DP 2004/21. Available at SSRN: https://ssrn.com/abstract=566021 or http://dx.doi.org/10.2139/ssrn.566021

Elias Papaioannou (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Gregorios Siourounis

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

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