Friday, October 21, 2011

Expected Versus Actual Democracy

Greg, you’re going love this. From VoxEU (excerpt):

The Democratic Transition
Fabrice Murtin Romain Wacziarg

As witnessed during this year’s Arab Spring, democracy doesn’t always emerge smoothly. This column examines the long march toward political freedom since 1800. It argues that while both income and education affect democracy, the rise in primary education has been the main driver of democratisation over 1870-2000.

Throughout history the march toward political freedom has not been a smooth process. It has happened in fits and starts, in waves, and was often reversed or interrupted. The collapse of several Middle Eastern authoritarian regimes in the wake of this year’s Arab Spring illustrates the point clearly...

...Whether democracy affects education and income or whether the causality runs the other way is the key source of disagreement in this debate. Studies examining the consequences of democratisation uncovered mixed results...

...In a recent paper, we revisited the drivers of the democratic transition and the debate over the direction of causality linking education, income and democracy (Murtin and Wacziarg 2011)...

...We found empirical support for the modernisation hypothesis over the long run – ie that both income and education affect democracy. The data reveal another key finding. The rise in primary education has been the main driver of democratisation over 1870-2000…On the other hand, using the same methodology, we found little evidence that democratisation led to higher educational attainment or faster long-term growth once controlling for the level of income.

Returning to recent events, the Arab Spring was partly predictable, as Middle Eastern countries displayed levels of democracy that were lower than those predicted by their level of education and income. Figure 3 focuses on these countries in particular, showing that their levels of democracy as predicted by our empirical model lie above their pre-2011 actual levels. In other words, the Arab Spring could be expected based on a dynamic statistical model of the factors that drive democracy (interestingly, the same observation holds for Iraq and Cuba)…

I actually covered this paper last month when it was released, and the conclusions between this article and the working paper haven’t changed – income and education drive democracy and not the other way around.

But the VoxEU article includes an interesting chart that wasn’t in the working paper (reproduced below, click on the link for a larger version):


The chart plots actual democratic level versus the model forecasted level of democracy given income and education levels. You’ll see the Arab Spring countries all fall below the line where actual and expected are the same.

The abbreviations by the way are the ISO 3166 –1 codes for each country. Malaysia’s code is MYS…try and spot it on the chart, and draw your own conclusions.

Now, Malaysia’s level of democracy is fairly high relative to the Middle East, which should make a difference in political economy terms and in the way people will express themselves politically – we’re not going to see an armed rebellion for instance. But pressure there will be.

Technical Notes:

  1. Murtin, Fabrice & Romain Wacziarg, “The Democratic Transition”, VoxEU, October 2011 (accessed October 21, 2011)
  2. Murtin, Fabrice & Romain Wacziarg, “The Democratic Transition”, NBER Working Paper no 17432, September 2011


  1. Hi Hisham,

    Thanks for this.

    Always need to be cautious when making predictions based on models.

    But agree that the relationship between democracy and economic growth is unsettled and as you pointed out its more plausible that it is income and education that drives democracy and not the other way around.

    Which brings us to TWO million dollar questions:

    1) Is the demand for greater democracy in Malaysia driven by educated people with higher incomes or lots of not very intelligent people being instigated?

    (2) Will greater democratic freedom raise growth rates in Malaysia?

  2. Greg, I think education is a sufficient condition for the demand for greater real representation, though that's just my opinion.

    I don't know that it would necessarily raise economic growth though. There might be a Laffer curve with respect to democracy :)

  3. The graph illustrates that Malaysia's observed position is lower that its predicted position suggesting that there is room for improvement.

    I would argue that should there be greater democratisation, the level itself, for the Malaysian case would rise.

    There could be a Laffer Curve (in the short run) as democracies are highly erratic (see US, Australia, Greece, UK) but I think democracies, over the long run, they are more stable than any other forms of organising society provided of course that the rules of the game are adhered to.

  4. I can't remember the reference - I'll have to seriously look it up one of these days, but there's an argument that the greater the level of democracy the more likely elected representatives will be "captured" by special interests. There's another one related to proportional representation which suggests the more democratic political representation becomes, the more likely national politics become polarised and extreme. Again, something I'll have to look up when I have the time.

  5. Yes, I'll appreciate the sources.

    The other argument (such as median voter theory) postulates that democracy (when set-up to local conditions)brings disparate groups to the centre thus benefiting the majority.

    But isn't economics unlike the natural sciences, where competing views can co-exists.

  6. "Economics is the only field in which two people can share a Nobel Prize for saying opposing things." Specifically, Myrdal and Hayek shared one.