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Political Rights, Property Rights, and Economic Development

by Adam Przeworski. Reading for Tuesday, 15 April 2008.

Some part of modern economic growth must have been due to a reduction of deadweight losses associated with upward redistribution of income. In turn, upward redistribution was reduced when new groups won political rights and used them to defend their interests. I construct a model in which holders of political rights maintain various barriers to protect their incomes and these barriers retard growth. Barriers protected the rich when only they enjoyed political rights; they were removed when the middle class gained su¤rage; while new barriers were erected and incomes became subject to direct redistribution through the fiscal system when su¤rage approached universal. As a result, growth rates first increased and then declined. This model is supported by econometric results covering the world from the inception of representative institutions until today. More direct historical evidence is fragmentary, but it shows that at least some barriers were removed as a result of extended suffrage.

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