Conclusions from the literature

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Markets and democracy

We can draw the following conclusions from this brief review of the academic literature on the subject.

• Although the research community remains divided, there is strong support for the proposition that increases in economic development are likely to lead to an increase in democracy, up to the point where the democratising effects of development begin to diminish.
• Once a country crosses a particular democratic threshold – especially when this is achieved through the traditional modernisation route – it is unlikely to slip back into authoritarian rule.
• The spread of democratic beliefs and demand for democracy play a role in consolidating democracies and preventing them from slipping back, but empirical support for them as independent causes of initial democratisation is weak.
• Countries with lower levels of inequality are more likely to become – and remain – democracies.
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The relationship between economic development and democracy is considerably weaker in countries that rely heavily on the extraction of natural resources as a means of generating national wealth.

The rest of this chapter examines whether these broad conclusions apply to the transition region. It uses some descriptive statistics and the results of regression analysis to test the propositions, as well as using household survey data to explore the democratic beliefs in different segments of society.

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