We present and test empirically a new theory of property and contract rights. Any incentive an autocrat has to respect such rights comes from his interest in future tax collections and national income and increases with his planning horizon. We find a compelling empirical relationship between property and contract rights and an autocrat's time in power. In lasting --but not in new --democracies, the same rule of law and individual rights that ensure continued free elections entail extensive property and contract rights. We show that the age of a democratic system is strongly correlated with property and contract rights. JEL O00, 010 3
This article presents a statistical study of the determinants of democracy in the postwar period. Important variables are found to be former status as a British colony, island status, the share of the population professing Islam, the share of the population that is of European descent, penetration of the English language during British colonial rule, and a measure of ethnic homogeneity. The evidence suggests that cultural beliefs and institutional inheritances are important determinants of the viability of democracy in poor countries, even when controlling for literacy and socioeconomic development.NOTE: The authors thank John Adams for detailed comments on an earlier draft of this article.
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