Economic Security and Freedom: Why Some Democracies Survive and Others Fail

We develop a theoretical framework where the chance of any given democratic society maintaining its democratic status is determined by two key factors: economic security and the value of freedom in the society. The value of freedom is comprised of freedoms individuals are formally entitled to in the current democratic regime (nominal freedom) and the actual freedoms individual exercise and enjoy (effective freedom), where the latter is determined by the cumulative history of previous experience with democracy. Economic security includes not only current economic performance, but also expectations of future economic performance under democratic and non-democratic regimes, a feature heretofore not included in either the theoretical or empirical work on democracy consolidation or breakdown. The model predicts that democracy survival is more likely the greater the level of effective freedom, the greater the anticipated growth in democracy, the smaller the anticipated growth after democracy breakdown, and finally, the greater the difference between anticipated growth in continued democracy and after democracy breakdown. Data on episodes of democracy that occurred between 1891 and 2006 are used to test the implications of the model. We find that general patterns observed in the data are consistent with our theoretical predictions. Anticipated growth difference has the expected positive effect - if anticipated economic growth under the alternative regime (proxied by current GDP growth in 'peer' countries) is greater than the expected economic growth under democracy (proxied by the country's current GDP growth), then the probability of breakdown is higher. Moreover, an increase in the value of freedom decreases the probability of democracy breakdown. Indeed, the overall level of freedom in neighboring and other countries appears to have a more important impact on democracy survival than a country's own experience. Finally, we find that democracy breakdown is significantly more likely to occur in the first few years, and then the likelihood declines over time.