Since the introduction of the Lipset Hypothesis on economic development and democracy, that is, ‘the more well to do a nation, the greater the chance that it will maintain a democracy’ the correlation between wealth and democracy has seen ‘rigorous empirical inquiries’ under various theories and analyses. It has been found that the association of wealth and democracy depends on other external factors where these factors can either enhance or negate this correlation. The relationship between wealth and democracy prevails with threshold effect and is not linear.
According to Lipset's theory, development consolidates democracy by expanding levels of literacy, schooling and media access, broadening the middle class, reducing the extremes of poverty, facilitating intermediary organizations such as labour unions and voluntary organizations and promoting the values of legitimacy and social tolerance.
Adam Perzewoski who has presented the most recent studies on the argument has confirmed the observation that wealthier countries are more likely to sustain democracy. He also found that democracies were no better and no worse than authoritarian regimes at generating economic growth and therefore his conclusion was that wealth helps to sustain and consolidate democracy but gradual economic growth does not create a transition from autocracy to democracy.
If development is taken as an independent entity, it is observed that the development of a country is not solely based on its increase in the GDP per capita but it also includes human development such as the development of social and living standards of the populace.
However the world today has seen authoritarian regimes and democracies that have achieved higher states of economic growth despite the differences in their political systems. Taking a glance at the Asian region, India and China are two countries which have reached the highest states of economic development and also have the highest growth rates...
Bibliography: CIPE Development Blog
Driving democracy, chapter 4
Living reviews in democracy, volume 01, 2009
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