Income and Democracy: Comment

Abstract

Acemoglu et al. (2008) document that the correlation between income per capita and democracy disappears when including time and country fixed effects. While their results are robust for the full sample, we find evidence for significant but heterogeneous effects of income on democracy: negative for former colonies, but positive for non-colonies. Within the sample of colonies we detect heterogeneous effects related to colonial history and early institutions. The zero mean effect estimated by Acemoglu et al. (2008) is consistent with effects of opposite signs in the different subsamples. Our findings are robust to the use of alternative data and estimation techniques. (JEL D72, O17, O47)