Poverty reduction and democratization - new cross-country evidence

The rapid decrease in absolute poverty across the developing world has received much attention. However, there have been few systematic attempts to analyse the political consequences of these developments. This article builds on the improved availability of household income data from developing countries to document a small but statistically significant impact of lagged poverty rates on a range of democracy indicators. The results hold across a battery of sensitivity and robustness tests. I also show that poverty reduction has a stronger effect on democracy than alternative predictors that are more widely used in the democratic regime transition and consolidation literature, such as average income and relative inequality (the Gini index). However, I find weaker effects of poverty on indicators of government quality and a declining influence of poverty reduction on democracy over time. These results point to more structural obstacles to democratic consolidation in lower-income regions, such as a tendency by populist leaders to exploit the economic grievances of vulnerable lower-middle classes.