Reconsidering the modernization hypothesis: The role of diversified production and interest‐group competition

Giovanni B. Pittaluga, Alessio Reghezza () and Elena Seghezza ()

European Journal of Political Economy, 2020, vol. 65, issue C

Abstract: The modernization hypothesis attributes democracy to higher incomes. The hypothesis has been controversial with claims of no relationship or opposite causality. Using data on a large sample of countries over the period from 1995 to 2015, we show empirically that the hypothesis is valid by studying the role of diversified production and interest-group competition. Increases in income associated with production diversification foster the emergence of competing organized interest groups representing the different diversified sectors. The interest-group competition underlies democracy by restraining rent seeking for benefits that would otherwise be sought through single-decision-maker authoritarian government.

Keywords: Modernization; Production diversification; Interest groups (search for similar items in EconPapers)
JEL-codes: D72 O47 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:poleco:v:65:y:2020:i:c:s017626802030077x

DOI: 10.1016/j.ejpoleco.2020.101929

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