Inequality and Sequence of Economic Liberalization and Democratization

Nobuhiro Mizuno

No 673, KIER Working Papers from Kyoto University, Institute of Economic Research

Abstract: Some recent empirical studies found positive effects of economic liberalization on democratization. Based on these findings, this paper explains why the sequence of economic liberalization and democratization is related to the effects of the two reforms on economic performance. Since economic liberalization increases the probability of democratization and democratization leads to income redistribution, in an economy with large inequality between the elite and the poor, the elite do not implement economic liberalization, and democratization occurs first. In such an economy, the effects of economic liberalization and democratization are lower because of distortions caused by large-scale income redistribution.

Pages: 20pages
Date: 2009-04
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Journal Article: INEQUALITY AND SEQUENCE OF ECONOMIC LIBERALIZATION AND DEMOCRATIZATION (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:kyo:wpaper:673

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