Transition Report 2013 Stuck in transition?

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Facts at a glance

70% Global proportion of countries which had democratic institutions in 2012, compared with 30 to 40 per cent from 1960 to 1990.

INCOME IN 1992 is correlated with levels of democracy in 2012 in a global sample.

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94% of countries with average per capita income above US$ 10,000 held free and competitive elections in 1999.

BY 2000 all constituent democracies of the former Yugoslavia had become full democracies.

Markets and democracy

Natural resource rents

Table 2.2 also shows that, worldwide, a country’s level of natural resource rents – defined as the share of GDP that stems from natural resource extraction – is a significant negative predictor of levels of democracy five years ahead. In the transition region the effect is only detectable when the dependent variable is an improvement in the Polity2 score for democracy (Max5Polity). This means that natural resource rents reduce the chances of a country becoming more democratic over the five-year horizon.

The negative impact of natural resource rents on the probability of an improvement in democracy is about twice as large in the transition region as it is in the rest of the world. The regressions do not find that natural resources trigger declines in democracy, reflecting the fact that few countries in the transition region that are rich in natural resources have seen declines in their levels of democracy. Most have stayed at low levels, and some have improved.

Chart 2.4 illustrates the potential role of natural resource rents in impeding democracy. The chart plots per capita GDP in 1992 against democracy in 2012 in oil producing countries (red rectangles) and non-oil producers (blue rectangles) in the transition region, as well as oil producers (red triangles) and non-oil producers (blue dots) outside the transition region. Countries in the transition region which have high natural resource rents are significantly less democratic than their level of income would otherwise predict.

Chart 2.4

Source: Polity IV and World Bank World Development Indicators.