Abstract

This chapter addresses the relationship between economic factors and democracy. It begins with a discussion of modernization theory and highlights the disagreement about whether wealth causes democracy or simply makes it more likely to endure. Despite this dispute, most scholars agree that development is good for democracy. The chapter then examines the pathways through which economic development affects democracy, including via education levels, the middle class, organized labour, and values and beliefs. In addition to levels of development, research also shows that changes in economic growth influence democracy. Economic crises can be destabilizing, especially for young democracies. Finally, the chapter considers research on economic inequality and democracy, which is inconclusive in its findings about whether a relationship between the two exists. It also studies how clientelism constitutes significant barriers to democratic consolidation.