Abstract:

This paper replicates the data set of Acemoglu et al. (2008) to investigate the relationship between the level of income and the degree of democracy in terms of advanced economies over the period 1960-2000. The study extends the initial findings of Acemoglu et al. (2008) in terms of econometric procedures by using the system-GMM and allowing for more flexible – non-linear – specifications for the effect of income on democracy. The empirical results provide evidence of positive and non-linear effect from income to democracy for advanced economies even after controlling for country-specific effects. In addition, with the same data set that of Acemoglu et al. (2008), we find that the coefficients of log GDP per capita are positive and statistically significant in most specifications by way of using the system-GMM method, in contrast to the results provided by Acemoglu et al. (2008). Furthermore, an interesting result is the square term of log GDP per capita which is negative and statistically significant. This outcome indicates that while the initial stages of an increase in log GDP per capita have a positive impact on democracy, the latter stages show that this positive correlation turns into a negative possibly due to the changing dynamics of the power of income segments in the society.

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