Testing Recipes for Regime Change

In recent years, research on democratization has argued that certain domestic socioeconomic conditions and a country’s relationship to global trade are better able to explain trends in regime change than the previously popular “third wave” argument, advanced most famously by Samuel Huntington. Unfortunately, researchers testing these theories face major difficulties measuring and controlling for political and socioeconomic variables. Recently, attempts to explain the ongoing “Arab Spring” have been spotlighting work in this area in a way not seen since the end of the Cold War.

Theories linking world trade to democratization are based on the hypothesis that increasing openness to trade will make democratization more likely in countries where the value of labor, such as the output of blue collar workers, makes up a greater proportion of GDP than private capital. Most of these arguments are rooted in the Stolper-Samuelson Theorem, which states that increases in relative prices for any good naturally benefit the owners of the factor most important in making that good. For example, when the price of oil goes up, the owners of extraction equipment will profit more than the workers because of their relative contribution to the total production. Proponents of the Stolper-Samuelson Theorem predict that when a country with an abundant labor force relative to capital benefits from trade, political power should end up in the hands of the working class, who will eventually demand a more democratic system of government.

However, according to a new study by John S. Ahlquist and Erik Wibbels, theories based on economic factors can’t explain everything. Using labor endowment data from two different sources, Ahlquist and Wibbels assessed the relationship between relative labor endowment (RLE) and democratization during the period between 1875 and 2002. The period between 1965 and 2000, when world trade expanded from 18 to 41 percent, provides a simple natural experiment. Economic factor-based models predict that countries with high RLEs would tend to democratize as world trade, defined as total imports and exports over total GDP, expands. When the RLEs are compared with fixed measures of democracy, Ahlquist and Wibbels show that a simple relationship does not bear out. Instead, democratic transitions appear to be much more common in countries with relative labor endowments at or below the mean. This includes low RLE countries like Argentina and Brazil, as well as places with close to mean RLEs like Eqypt and Tunisia, the quintessential Arab Spring countries.

To control for the possibility that other variables, including trends in neighboring countries and global waves, may account for some of the unexpected outcomes, Ahlquist and Wibbels tested their results against the proportion of democracies world wide and in the immediate vicinity, political systems, and a history of previous democratic failures. Carefully considering the dependence of world trade on the international monetary system, they also controlled for major changes in macroeconomic indicators, such as the gold standard or the fixed exchange rates established at Bretton Woods after the Second World War.

Finally, the researchers also examine the impact of economic inequality, or the “income gap.” Although reliable data has been collected recently and is available for OECD countries into the 1980s, measuring domestic inequality for most of the period in question is difficult because it was not measured in a standard way. Despite this disclaimer, Ahlquist and Wibbels use what they consider to be the best available data to create a useful inequality variable.

Controlling for these variables, the researchers found that the probability of a democratic transition was dramatically higher in countries surrounded by lots of other democracies; especially if a neighboring country had undergone democratization within the last year. This might do more to explain the history of cascading political revolutions observed in Eastern Europe after the fall of the Soviet Union and the recent Arab spring. As for the effect of RLE, Ahlquest and Wibbelsmodel does not find a strong conditional relationship.

Their research highlights the problems with existing theories and with the data itself. In the end, Ahlquist and Wibbels say, complex models of democratization that account for the relationship of world trade to socioeconomic factors are useful, but much more work is needed if political science is to explain why and how countries make the transition to democracy when other do not.

Feature photo: cc/ Mosa’aberising