“Pretty much every agency or nonprofit out there acts under the assumption that if you help people grow economically, this will lead to democracy,” says Simon Johnson, a professor at MIT’s Sloan School of Management. Yet the widespread notion that increasing per capita income will cause democracy simply isn’t true, report Johnson and his colleagues in a recent research article. Instead, their analyses of 500 years of data from around the world show that complex historical factors shape both economic and political development, rather than economics determining politics.
Whether your nation is currently democratic and wealthy “is very much about what your institutions were like when industrialization occurred,” explains Johnson. “Places with good institutions”—especially ones that checked executive power—“made opportunities available to a broad swath of society. And so 80 to 90 percent of the population later wound up with good rights and a decent standard of living.” But when industrialization took place in autocracies, he says, “maybe only 20 to 30 percent of the population wound up benefiting.”
People aren’t foolish to think that income and democracy are related. Indeed, a quick whiz around the modern world reveals that, generally speaking, the wealthier the country, the freer and fairer its elections, the more competitive its political parties, and the better its representation of minority groups. Although some nations buck this trend—Singapore, China, Russia, and Saudi Arabia are notably rich nondemocracies—these nations lacked the rule of law or checks on executive power that would have sparked democracy. But by and large, per capita income and democratization go hand in hand.
At the same time, the old chestnut holds true: Correlation does not imply causation. The rough-and-ready conclusion that income causes democracy belies the complex historical processes that brought about the current state of affairs. It also leads to flawed policies and programs, points out James A. Robinson, a professor of government at Harvard University and one of the report’s authors. He notes that in Iraq, “one could argue” that the U.S. government just gave advice on economic policy and then waited for economic growth to create democracy.
To promote democracy, says Robinson, governments and nonprofits need to think harder about how to change the social institutions that either nurture or hinder it. Likewise, “businesses might also want to consider how their behavior influences the way these institutions work,” he says, citing the example of the Chiquita Banana Company. Last year, the U.S. Justice Department fined the produce giant $25 million for paying bribes to paramilitary organizations in Colombia. “Doing business in that way undermines both the democracy and prosperity of Colombia,” says Robinson.
The authors conclude that building democracy is a poorly understood, slow process. But in the near term, “development projects such as improving health care and spreading technology are all terrific,” says Johnson. “I don’t know if they will lead to democracy, but they will really improve people’s lives.”
Daron Acemoglu, Simon Johnson, James A. Robinson, and Pierre Yared, “Income and Democracy,” American Economic Review, 98, 2008.
Read more stories by Alana Conner.