Petros Sekeris on theoretical foundation of the modernization hypothesis

Petros Sekeris presents at the WIDER Seminar Series on 24 November.

Abstract 

The modernization hypothesis proposed by Lipset (1960) posits that as economies develop, this should map into increased democratization. Empirical evidence on the topic that has so far failed to reach unanimous conclusions (e.g. Przeworski and Limongi 1997, Barro 1999, Boix and Stokes 2003), even with the use of state of the art econometric approaches (Acemoglu et al. 2008, Cervellatti et al. 2014). We posit that one potential reason for the lack of conclusive results rests in the insufficient understanding of the precise mechanisms tying economic development to political regimes.

In this paper we develop a theoretical framework where citizens derive utility from both material goods, and the degree of political freedom of their polity, with the two arguments of the utility function potentially exhibiting complementarities to the extent that wealth can never perfectly substitute the lack of political liberties and representation. Goods are produced endogenously, with the opportunity cost of production being the marginal improvement of political freedom that would obtain from more intense lobbying/protests for political rights. The ruling elites aim at minimizing the degree of political freedom so as to increase their likelihood of retaining power and the related material benefits. We establish an inverted U-shaped relationship between economic development and democratization: economic development in poor countries incentivizes citizens to push for democratization to benefit from the said complementarities, while in rich countries political demands weaken as the economy develops because of an income effect that reduces the incentives to push for political freedoms. We then corroborate our theoretical findings with empirical evidence using the data of Acemoglu et al. (2008), and thus establish that the apparent invalidation of the modernization hypothesis put forth by these authors results from failing to account for non-linearities: the modernization hypothesis is verified for developing countries.

About the speaker

Dr. Petros Sekeris, Associate Professor in Economics, joined Montpellier Business School in September 2016. He holds a Ph.D. in Economics from the University of Namur (Belgium). Prior to joining the MBS, he was associate professor in Economics at the University of Portsmouth. His research mostly employs game theoretical tools to analyze several different topics including development economics, institutional economics, conflicts, and industrial organization. His research is published in international journals such as RAND journal of economics, Journal of Public Economics, Journal of Industrial Economics, Journal of Environmental Economics and Management, and Journal of Comparative Economics.
 

WIDER Seminar Series

The WIDER Seminar Series showcases the latest research on key topics in development economics. It provides a forum for senior and early-career researchers, both inhouse and external, to present recent and ongoing work related to UNU-WIDER’s current work programme.

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