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A farewell to critical junctures: Sorting out long-run causality of income and democracy

Erich Gundlach () and Martin Paldam

No 1410, Kiel Working Papers from Kiel Institute for the World Economy (IfW)

Abstract: We consider the empirical relevance of two opposing hypotheses on the causality between income and democracy: The Democratic Transition hypothesis claims that rising incomes cause a transition to democracy, whereas the Critical Junctures hypothesis denies this causal relation. Our empirical strategy is motivated by Unified Growth Theory, which hypothesizes that the present international income differences have roots in the prehistoric past. Thus, we use prehistoric measures of biogeography as instruments for modern income levels, and find a large long-run causal effect of income on the degree of democracy. This result rejects the Critical Junctures hypothesis, which is an important part of the Primacy of Institutions view.

Keywords: Democracy; Unified growth theory; Biogeography; Long-run growth (search for similar items in EconPapers)
JEL-codes: O1 B25 (search for similar items in EconPapers)
Date: 2008
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Journal Article: A farewell to critical junctures: Sorting out long-run causality of income and democracy (2009) Downloads
Working Paper: A farewell to critical junctures: Sorting out long-run causality of income and democracy (2008) Downloads
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