Democracy and Economic Development

ERF 21st Annual Conference

Gammarth, TunisiaMarch 20-22, 2015

Culture and democratization

Gerard Roland UC BerkeleyERF, Tunis March 2015

Introduction• Research on democratization has since Lipset (1959)

turned around the democratization hypothesis: whether and to what extent income per capita is a determinant of democratization, and what are the mechanisms linking income per capita to democratization. One of the main research areas in political science.

• In Gorodnichenko and Roland (2010, 2013), we examine the role of culture on both income and democratization.

• In recent years, economist have finally started to analyze theoretically and empirically the economic effects of cultural differences.

• Today’s talk: role of culture on democratization, and possible link with income.

What is culture?

• The set of values and beliefs people have about how the world (both nature and society) works as well as the norms of behavior derived from that set of values.

• Comprehensive definition. Strong overlap with religion but somewhat more inclusive. Culture also evolves somewhat more than religion.

• Not culinary or clothing habits.

Individualism and collectivism• individualism and collectivism is the main cultural

dimension identified by cross-cultural psychology (see Heine, 2008).

• Individualistic culture emphasizes individual achievement (standing out) and awards social status to success in individual achievement, be it economic, artistic, scientific, humanitarian,…

• Collectivist culture emphasizes conformity and embeddedness in larger groups and frowns on deviation from conformity. (see e.g. Platteau 2000).

• Individualism and collectivism are associated with differences in self-image, motivation, choice-making, effort, relational mobility, behavior to ingroup and outgroup and even cognitive differences (see survey in Gorodnichenko and Roland, 2012)

Measurement of individualism• Hofstede’s (2001) measure of individualism versus

collectivism. Initially based on surveys among IBM employees across the world to understand cultural differences within a corporation. Was generalized to more than 90 countries later on. Based on factor analysis of survey questions. Loads positively on valuing individual freedom, opportunity, achievement, advancement, recognition and negatively on valuing harmony, cooperation, relations with superiors. Measure validated by other studies on smaller samples.

• Schwartz cultural mappings: dimensions of intellectual and affective autonomy opposing embeddedness have high correlation with Hofstede data.

Hofstede individualism index

Culture and democratization• Cultural values affect the direction of institutional

change when there is a window of collective action (revolution, elite revolt). Revolts do not necessarily lead to democracy, even when they are successful, but may lead to a particular autocratic regime.

• Individualistic culture creates demand for democracy. Freedom is fundamental for self-achievement. Equality before the law and limited government necessary to protect individual freedom.

• Collectivist culture emphasizes more the necessity of a benevolent ruler to create stability between different clans and groups. Emphasis on hierarchy and order. Freedom seen as endangering stability.

Culture and democracy

• Gorodnichenko-Roland (2013) model: Individualistic culture might be less good at overcoming collective action failure compared to collectivist culture, but will nevertheless in equilibrium end up earlier with democracy over time, while collectivist cultures may have more revolts but may get stuck with “good” autocratic regimes.

Individualism and democracy

Probability of autocracy breakdown

Culture and democratization

• There might be a two-way effect between individualism and democracy. Instrumental variable strategy needed.

• Historical pathogen prevalence (leishmanias, trypanosomes, filariae, leprosy, dengue, typhus and tuberculosis.etc.).. Fincher et al. (2008) show direct link with collectivism as higher pathogen prevalence pushed communities to adopt more collectivist values emphasizing tradition, putting stronger limits on individual behavior, and showing less openness towards foreigners.

Culture and democratization

• Econometrically, satisfies the exclusion restriction. No link from pathogen prevalence to democracy or autocracy: autocracy not necessarily better than democracy at dealing with pathogens.

• We also use Euclidian distance between the frequency of blood types A and B in a given country and the most individualist countries (USA and UK), based on Cavalli-Sforza et al. (1994) data and understood as a proxy for cultural transmission.

Culture and democratization

• Effect of individualistic culture on democracy is robustly significant when controlling for:– Conflict– Religious controls– Institutions– Inequality– Fractionalization– Education …– … and income

Culture and income per capita• In Gorodnichenko and Roland (2010), we show

empirically that countries with more individualist culture have more innovation and higher long term growth, controlling for all the variables in the growth literature (institutions, education, …)

• Theory: social status reward to innovation gives dynamic advantage to individualist cultures while collectivism gives superiority in coordination, which has only a static advantage..

• It is difficult to disentangle direct effect of income on democratization and indirect effect via individualism, but there is a clear and robust effect of individualism on democracy.

How does this relate to MENA countries?

• MENA countries measured in Hofstede data are in the middle of individualism-collectivism index, but have a much lower polity score

• If cultural theory is correct, there are reasons to be optimistic in the long run for MENA, but the short run is very uncertain, and most MENA countries have not had any experience of democracy.

• Most reversals of democracy take place only a few years after regime change (Svolik, 2007).

Policy recommendations• Culture changes only very slowly, but strong public

debates needed between proponents and opponents of democracy (like in the interwar period in Europe).

• Easier to win the debate if values are closer to individualism.

• Inclusive democracy is important to avoid tyranny of the majority.

• Political institutions with strong separation of powers between branches of government prevent too much concentration of power and are stabilizing, even at the cost of possible paralysis of decision-making.

• Decentralization and federalism help coping with geographical political heterogeneity and empower civil society.

Democracy and Economic Development

ERF 21st Annual Conference

Gammarth, TunisiaMarch 20-22, 2015