Industrialization and Democracy

Abstract

I provide a new theory of the relationship between economic development and democracy. I argue that a large share of employment in manufacturing (i.e., industrialization) makes mass mobilization both more likely to occur and more costly to suppress. This increases the power of the masses relative to autocratic elites, making democracy more likely. Novel manufacturing employment data for 145 countries over 170 years (1845--2015) supports this hypothesis. First, all highly developed countries in the West and East Asia democratized when approximately 25% of their workforce was employed in manufacturing, and virtually no other country has ever reached this level without eventually becoming a well-functioning democracy. Second, industrialization is strongly correlated with democracy, even after accounting for two-way fixed effects and other economic determinants of democracy (e.g., income and inequality). Last, unlike with other economic determinants the effect occurs on both transitions and consolidations, and is equally large after WWII.